Managerial vs Financial

Financial accounting and managerial accounting are two different branches of accounting that serve various purposes. Financial accounting focuses on creating financial statements—like balance sheets and income statements—that provide a snapshot of a company’s financial health. These statements are intended for external parties, such as investors and banks, and follow strict rules called generally accepted accounting principles (GAAP). On the other hand, managerial accounting is geared towards helping managers within the company. It provides detailed information like budgets and forecasts to aid in decision-making and planning. Unlike financial accounting, managerial accounting is more flexible and tailored to the specific needs of the business. Another stark difference is that financial accounting looks back at the company’s past performance for outsiders, while managerial accounting helps managers plan for the future.