The Differences Between Financial And Managerial Accounting

1320 Words6 Pages
Regardless of what industry an organization may be a part of, accounting plays a vital role in everyday decision making. Without the field of accounting, companies and organizations would not be nearly as efficient, productive and successful as they are today. Accounting serves many purposes for an organization, whether it is financial or managerial. But, not all forms of accounting are the same. With that being said, to better understand the differences between financial and managerial accounting, it is important to first know their definitions. Financial accounting is the branch that keeps track of a company’s financial transactions. This form of accounting records, analyzes, and presents the transactions in a number of financial…show more content…
However, if the company was not making a net profit, then something needs to be done within the organization to get it back on the right path (Financial vs. Managerial Accounting). The balance sheet is centered on the assets, liabilities and stockholders’ equity of an organization. The assets show what the company owns (cash, accounts receivable, inventory, etc.), the liabilities show what the company owes (salaries payable, notes payable, etc.), and the stockholders’ equity show the amount of money the company has left to reinvest. The balance sheet is important because it provides those who may be interested with information that tells the financial condition of a company. If the balance sheet presents that the company has a minimal amount of liabilities and a large amount of money left over, then it most likely is an organization worth investing in. But, if the company has more liabilities than it can handle, then maybe it is best for investors to steer clear and find a more dependable and successful company (Financial Accounting). The statement of cash flows provides information in regards to where money is going, where money is coming from, and the various operating, investing, and financing activities of a company. The overall objective of the statement of cash flows is to follow the money inflow and outflow of the company for a specified period of time. The operating activities that are covered
Open Document