What Is Management Accounting?

Financial accounting provides information for third parties of an organization (Horngren, Sundem, & Stratton, 2005). That is why it is vital for financial accountants to provide useful and comprehendible information that can aid them in their decision making. Such information that can help is assessments of amounts of cash flow, timing of cash flow, and even uncertainty of cash flow. Also economic resources of the enterprise, claims on those resources, the effects of transactions if any, events, and circumstances that could effect them. Responsibilities of financial accountants are recording the business's financial information, then classifying the information, along with summarizing and communicating it to the public.

Management accounting provides information for managers in an organization (Horngren, Sundem, & Stratton, 2005). An organization is a team and to help the team the management accountants have to provide correct and useful information too. They have to determine the appropriate financial data they need. If they analyze the information correctly it helps calculate the return on investments for the team which makes the managerial accountant the LEAD financial accountant in a way. Experienced management accountants develop projections carefully to put the team at ease about the uncertainty of a product or project being successful or not. Responsibilities of management accountants are collecting and compiling the information, then preparing the standardized reports, interpreting and analyzing the information, and being involved in the decision making.

There are several differences between financial and management accounting. The major difference is who their primary users are (Horngren, Sundem, & Stratton, 2005). Financial accounting's primary users are third parties and management accounting's primary users are organization managers. Another difference is that financial accounting