financial and managerial accounting basics

What is financial accounting and why do we use it? With financial accounting basics, it is possible to identify, calculate, observe, transmit and analyze financial data for either an individual or a company. These financial data will enable better decision-making of an economic point of view.

The financial accounting concepts can be used to both internal users as external users. External users are the owners, competitors, creditors, financial analysts, tax authorities and the government, shareholders... On the other nad, internal users are rather business leaders, managers and staff of the company.

In accounting, we often refer to GAAP (generally accepted accounting principle). GAAP is the baseline in terms of accounting rules under which financial statements are usually prepared.

To better comply with these rules, a relatively strict theoretical framework must be respected by all accountants. This theoretical framework serves as a marker to bring together all the objectives of financial accounting and the various key concepts. It allows you to conceptualize the nature, usefulness and limitations of global standards for financial accounting basics.

Managerial Accounting

Management accounting ''commonly known as managerial accounting'' is the development of the acquisition of information and data obtained to support the various decisions of planning, organization, management and control for managers and employees. This information will be used to achieve multiple business objectives.

Unlike managerial accounting, financial accounting intend to inform shareholders, bankers and others outside the company of its financial situation.

While in financial accounting, the tasks are more focused on transactions and past financial transactions, managerial accounting is meant to be much more future-oriented. That's why planning is one of the major activities of the accounting exercise. The business must constantly analyze the shifting aspects of the economic condition, customer needs and competition.

In summary, management accounting guide present and future decisions for the company, to collect timely information and consistent and flexible datas, to obtain specific sectoral reports on goods and services, customers and employees. However, managerial accounting is a plus for the company, there is no obligation for a company to create a specific department for that field.

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