What is financial accounting and who are its users

Financial accounting is business information related to business, its users can be managers, creditors, suppliers, analysts, auditors, employees, shareholders, competitors, customers and of course  owners of the business, In the broad terminology of financial accounting often distinction is made between management and financial accounting

Management accounting is internal reporting system within the organization among its managers and, it provides them strategical information for the right business decisions taken often by the business mangers or owners of any organization usually this information is not available to outside world, It helps managers to strategically allocate the resources of an organsition to its best use over its competitors.

In other words one may conclude that Financial reporting is external reporting systems meant for outsiders with an aim and provisions of information to users other than inside managers, most organsiation publish financial accounting  statements on quarterly basis under statutory provisions which provides information about the results and performance of the organization its present and past business activities this financial information can be used for investment purpose or raising capital, taking loans this information will focus on managements future planning and activities regarding allocation of funds.

There are few basic difference between financial accounting and management accounting which can be summarized below:-

Purpose

Financial reporting are more tend to be general purpose focusing more on monetary value, while management accounting reports are often specific purpose reports, as these reports are designed for specific purpose to take decision.

Level

Financial accounting reports has macro level detail analysis of organization, however management accounting reports often focus on specific business area that provide managers considerable detail like 4 P(Product, Price, Place, Promotion).

Regulatory Purpose

Financial accounting reporting system are based on regulatory framework of the country with different format and content the standardization of such format varies among different countries,  however in management accounting there are no predetermined or pre designed formats of reporting , these can be customized as per needs of the mangers or management of the organsiation.

Time Interval

Financial accounting reports  have fixed reporting time intervals it can be quarterly, half yearly or annual basis, however management accounting reports can be prepared on daily  monthly, fortnightly or even hourly basis, there is no fixed criteria for such reporting it entirely depends upon its managers and when and why such reports are required.

Quality

Financial accounting reports mainly emphasis on the use of organization’s objectives and how are they going to achieve it, while management accounting reporting mainly focus on the internal information which is required to bring in overall efficacy to the management..