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Both Managerial Accountants and Financial Accountants produce reports and information
explicit to their position within their company. Financial and Managerial Accountants
begin with the same raw data to generate different report. These reports differ and can be
used by several audiences for different purposes. Financial Accounting is an analysis of a
company past performance and is a backward way of thinking. Financial accounting is in
plain black and white and leaves little to the imagination. The numbers used in financial
accounting tend to be concrete since they are based on past company performance.
Financial statements are prepared with the idea that for people outside of the company will
be looking at them.
Managerial Accounting is a forward way of thinking that guides relevant company
decisions. Management accounting is more imaginative than financial accounting. There is
more speculation and projection involved than in financial accounting. Managerial reports
use financial statements generated by Managerial Accountants to promote company
movement and growth. These reports project how a company can grow and manage
company resources more efficiently. These reports are generally prepared for executives or
relevant people within a company. Managerial reports are more detailed.
Financial statements are an analysis of the overall financial activities of a company. A
balance sheet reports on a companys liabilities, net equity and assets for a specific period.
An income statement or profit and loss statement reports on a companys results of
operations for a specific period. A cash flow statement is a report on the cash flow
activities of a company. Cash flow activities include investing, financing activities and
