Principles of Accounting

1276 Words5 Pages
Principles of Accounting Name Institutional Affiliation Date: Principles Accounting Part I: 1. How is managerial accounting different from financial accounting? Managerial accounting is mostly used by organizations for purposes of internet alone. The format it uses may not be conforming to the standardization by GAAP. Flexibility is offered for by the system so as the corporate can oversee needs for future and purposes of planning. Managers use managerial accounting to implement decisions that are concerned with the daily operations of an organization. It relies a lot based on past performance but on trends that are current and future and do not give an allowance of exact numbers. Financial accounting is closely related to GAAP. Standardization is necessary for accommodation of outside agencies might be in need of this information. It is not useful in any way to predict the future. Management account relies a lot on the future market trends, and managers are faced with the difficulty of making critical decisions within a short period in a fluctuating environment (Holgate, 2006). Management accounting is usually presented internally while financial accounting is for use by external stakeholders. Financial management might be very significant to potential and current investors, but management accounting is a necessity for managers for making decisions for their current and future financial status. Financial accounting is specific and must conform to GAAP while
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