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Much of the analysis done by financial managers is based on numbers that are different
from what would seem to be the corresponding numbers presented in the financial
statements. This difference is not due to any kind of cooking the books or other
attempts to mislead anyone. One example is the use of market value rather than
historical cost in the valuation of assets.
For your first post,
• Define financial management.
• What are some other examples of the differences between financial management
and financial accounting?
• Give examples.
Hello Everyone/ Professor,
Let’s start by defining the meaning behind financial management followed by looking
into its difference with the definition of financial accounting. Financial management can
be defined as managing money, and the financial funds of a company or an entity. With
the utilization of proper financial management skills, the financial management roll is
able to effectively plan, organize, and direct the financial funds and activities of a
company towards reaching the company and organizational financial goals and
objectives. The financial management roles in well organized and complex companies
are typically assigned and handled by the upper management levels within a company.
Now that we defined financial management we can look into its difference with the
financial accounting. I will start by defining what financial accounting is. Financial
accounting is defined as a specialized roll in the accounting world where its mainly
tasked with tracking the company’s financial events and transactions. Financial
accountants utilize specialized guidelines in order to ensure the proper recording,
summarization, and the presentation of a company’s financial statements such as its
income statements, and balance sheets.
The main and core difference between financial accounting and financial management
is that financial management rolls provide financial information internal to the company,
whereas financial accounting rolls provide financial information to entities external to the
company such as stockholder, investors, banks and creditors.
Another point to touch on in differentiation the two would be that financial accounting is
a lawful requirement, where on the other hand financial management is not; however as
you can imagine financial management can be one of the most crucial and important
rolls within huge and complex companies. For example, I work for Consolidated Edison
which Is one of the biggest utility companies in New York, and our financial
management department provides us with monthly quarterly and yearly financial
information. I believe without having our financial management department controlling,
and advising us on our budgets, it would be nearly impossible for us to meet our yearly
KPI goals.
Differences between financial management and financial accounting
Financial accounting is reporting financial information of business organization to third parties such
as creditors , potential share holder , govt . Some eg are P&L statement or Income statement ,
Balance sheet
Financial management cover everything that involves finance . Focuses on financial planning ,
control decision making eg estimating how much funds will be required , determining the capital
structure , good investments plans
The difference between financial management and financial accounting is with respect to their
purposes. With financial accounting, managers aim to collect and present financial information.
To constantly improved and easily interpret previous data, present and future inclinations of
the company. Meanwhile, financial director’s prime duty and responsibility associates to
financial strategy, managing and controlling, and decision making. Therefore, finance starts
where accounting ends.
While financial accounting has to do with the recording, reporting and the deals and transactions
of a business, financial management has more to do with the "management" of what the
