Essay on Managerial & Financial Accounting: Essential for Business Professionals

Managerial accounting and financial accounting are two of the most significant branches of accounting in any school of business. In the field of business, some components must be considered, such as the finance and managerial sections. Many companies have realized the importance of managerial and financial accounting (Maher, Stickney & Weil, 2012). Anyone who wishes to pursue a career in the business field must have the basic on the two major categories. Both administrative and financial accountings correspond and implement each other, but they are actually different field in business studies.

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The financial accounting tends to deal with reporting and representing historical data to the external sources, and it has to adhere to the stipulated accounting principles (GAAP). On the other hand, managerial accounting deals with reporting of data to internal sources within the organization with the main aim of informing the planning within the organization. However, financial accounting seems to be mandatory as it is to be in line with most government and trade policies, but managerial accounting is generally optional.

Managerial accounting is the procedure of determining, analyzing, recording and presenting financial information. Moreover, it is applied for the purposes planning, decision making, measurement and control by the board of management internally with the organization. The managerial accounting tends to relate with just some specific segment of the company. Financial accounting information is shown in every financial statement that is expected to be used for external sources such as the creditors and Stockholders and creditors. Such outside source seems to use the financial accounting information to decide on several issues like whether they should continue investing in the company or terminate their assistance or increase the credit to the said company.

All business organizations which have any sort of economic resources do apply accounting information; thus, accounting is a critical business language for every business. The accounting process offers a broader range of financial data. For many people such as Bank officials, who may be required to survey a company's financial statements so as to assess and monitor the company's ability to repay a loan in due time. There have been constant arguments as to which between financial accounting and managerial accounting is more crucial than the other. Nonetheless, it is essential to know that each branch is important in its own unique way since each has its own purpose in the business environment, but they differ in various ways.

For an introductory section of financial accounting, an individual is required to learn how to read financial statements and annual reports to be able to comprehend the financial weaknesses and strengths of a company. There is also a need to be able to read and understand the income statement, cash flow and balance sheet (Warren, Reeve & Duchac, 2011). Nevertheless, Managerial accounting encompasses performance evaluation, financial analysis, budgeting and forecasting, product costing and pricing, governance, corporate finance, evaluation of business decisions and other areas that are relevant to be covered.

Conclusion

In conclusion, accounting information is applied by individuals, investors, government, creditors and authorities. Is mandatory by law for any company to reveal an annual report before the public that shows accounting information. Such a report is typically applied as indisputable evidence while computing the tax liability of a business.

References

Maher, M. W., Stickney, C. P., & Weil, R. L. (2012). Managerial accounting: An introduction to concepts, methods and uses. Cengage Learning. Retrieved from: https://www.amazon.com ' Managerial-Accounting-Introduction-Concepts

Warren, C. S., Reeve, J. M., & Duchac, J. (2011). Financial & managerial accounting. Nelson Education. Retrieved from: https://www.cengage.com ' financial-managerial-accounting-14e-warren