Distinguish between Financial accounting and Managerial accounting

 Financial accounting reports are prepared for the use of external parties such as shareholders and creditors, whereas managerial accounting reports are prepared for managers inside the organization. The difference between Financial Accounting and Managerial Accounting are as follows :

Financial Accounting	Managerial Accounting
Reports to those outside the organization owners, lenders, tax authorities and regulators.	Reports to those inside the organization for planning, directing and motivating, controlling and performance evaluation.
Emphasis is on summaries of financial consequences of past activities.	Emphasis is on decisions affecting the future.
Objectivity and verifiability of data are emphasized.	Relevance of items relating to decision making is emphasized.
Precision of information is required.	Timeliness of information is required.
Only summarized data for the entire organization is prepared.	Detailed segment reports about departments, products, customers, and employees are prepared.
Must follow generally accepted accounting principles (GAAP).	Need not follow generally accepted accounting principles (GAAP).
Mandatory for external reports.	Not mandatory.
Limited companies must, by law prepare financial accounts.	There are no legal requirements for an organization to use management accounting.
Most financial accounting information is of a monetary nature.	Management accounting information may be monetary or alternatively non monetary.
Financial accounts are supposed to be produced in accordance with a specified format by IAS or law.	Management accounting has no specified format. There are no specific statements which should be produced.