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In many universities and schools, there is both a Managerial Accounting and a Financial Accounting course. From what I can gather, Financial Accounting covers accounting from an perspective of an investor, while Managerial Accounting covers accounting from the perspective of a business manager.

Is there really a difference, or is the distinction more of a subjective standpoint?

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From Wikipedia:

Managerial accounting is used primarily by those within a company or organization. Reports can be generated for any period of time such as daily, weekly or monthly. Reports are considered to be "future looking" and have forecasting value to those within the company.**

Financial accounting is used primarily by those outside of a company or organization. Financial reports are usually created for a set period of time, such as a fiscal year or period. Financial reports are historically factual and have predictive value to those who wish to make financial decisions or investments in a company.

At my university, managerial accounting focused more on the details of how costs were managed in the company, the future of the business, etc. while the courses that were considered financial accounting were more from the point of view of a financial analyst or investor, like you said. The financial accountancy material covered analysis of financial statements and the associated investment decisions, among other things.

These areas overlapped in areas like the production of financial statements, since the company also needs to consider how analysts will interpret these statements, and dividend policy, corporate tax accounting, etc. The Wikipedia articles on managerial accounting and financial accounting may provide helpful information as well.

Disclaimer: I took an introductory accounting course in university and nothing more, so my knowledge of the course structures, even at my alma mater, is secondhand recollection at best. I'm sure there are more similarities and differences of which I'm unaware, and I would assume that forensic accountants, auditors, etc. dabble in both these areas and others.

  • I see what you mean by the areas which overlapped. Do you have any examples of an area typically covered in managerial accounting but not financial accounting? – Vilhelm Gray May 22 '13 at 14:31
  • @VilhelmGray Costing methodologies, perhaps? I gave you about as much information as I could, unfortunately. – John Bensin May 22 '13 at 14:35
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    +1 this is a correct answer. I work as a management accountant, and can shed a bit of additional light on some practical examples. Financial Accounting (think CPA, GAPP, IFRS, Treasury, etc) is required and focuses on well-defined reporting requirements. Managerial Accounting is not required, not always well-defined, and different companies engage in it to very different degrees. Some of the key areas that management accountants typically focus on are Budgeting, forecasting/FP&A, Business Analytics/Decision Support, internal Cost and Performance management/reporting/modeling. – JAGAnalyst May 22 '13 at 18:37
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    So for example, I used to work a lot with internal cost control, modeling the cost structure of operations under various scenarios, and now I work a lot with internal financial performance, such as looking at various factors that contribute to our margins. Overall, the function of managerial reporting is to increase the availability and quality of the information that is available to management. This kind of information is used to make business decisions that result in the kind of information an investor would care about as communicated via Financial accounting. – JAGAnalyst May 22 '13 at 18:42
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    Sure thing - your answer is very accurate so no need for my own. Voted for yours! It can just be hard for a student to come up with examples on these kinds of things. – JAGAnalyst May 23 '13 at 4:18

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