In accounting what is the difference between a financial and management account?

Answer 1

Financial accounting can be described as the collecting and recording of financial information about an organisation whether in the the public or private sector and the analysing of such information and then reporting to the user in a manner that is suitable for making decisions.

Management accounting on the other hand can be defined as the relating of the cost and benefits of management, strategic planning, controlling, decision making and performance appraisal all of which is to enhance internal control within the organisation.

Major Differences

Financial accounting is for external and internal use while management accounting is for internal use.

Financial accounts of an organisation must be published while management accounts is not compulsory

Financial accounts is bound by guidelines and principles that is generally accepted accounting principles (GAAP) while management accounts is not.

Answer 2

A Financial Accountant should be producing the information about the business that is used by external people, so they would be responsible for producing the annual accounts for the business.
Management Accounting is more about working within the business to provide the key business users (board members, directors and senior management) with the information that they need to manage and drive the business forward.
Financial accounting tends to be reporting on historical information, but management accounting should take the historical information and turn it into useful suggestions that can be transformed into plans for the future.

Answer 3

Financial is a broader term. where as management account is a specific. Without finance there can not be any accounting. When accounting is done there after management uses the various ratios and takes the decision based upon the financial accounting. These decisions are then decides the success and failure of the business.