process of identification, measurement, accumulation, analysis, preparation, interpretation,and communication of financial information that is used by management to plan, evaluate, and control within an organization. It is the accounting used for the planning, control, and decision-making activities of an organization. Managerial accounting is concerned with providing information to internal managers who are charged with directing, planning, and controlling operations and making a variety of management decisions. Managerial accounting can be contrasted with Financial Accounting which is concerned with providing information,via financial statements, to stockholders, creditors, and others outside the organization. More specifically, the differences between financial and managerial accounting are summarized here:
| Financial Accounting | Managerial Accounting | ||
| (1) | Provides data for external users | (1) | Provides data for internal use. |
| (2) | Is required by FASB. | (2) | Is not mandated by FASB. |
| (3) | Is subject to GAAP. | (3) | Is not subject to GAAP. |
| (4) | Must generate accurate and timely data. | (4) | Emphasizes relevance and flexibility of data. |
| (5) | Emphasizes the past. | (5) | Has more emphasis on the future. |
| (6) | Looks at the business as a whole | (6) | Focuses on parts as well. |
| (7) | Primarily stands by itself. | (7) | Draws heavily from other disciplines such as finance, economics, and operations research. |
| (8) | Is an end in itself. | (8) | Is a means to an end. |
