Provide Accounting Information, Different Users (PAIDU)

Financial accounting maintains business transactions and records the

information so that users can make wise financial decisions. As opposed to
management accounting, also referred to as managerial accounting, which is a
relatively new area of accounting that deals with managerial issues. It mainly focuses
on giving the company's management financial reports to enable them to make wise
economic decisions.
Both provides accounting information to the users. However, they differ when
it comes to the users. Financial Accounting shows external stakeholders how a
company's finances are doing. This makes it possible for the board of directors,
shareholders, potential investors, creditors, and investment firms to comprehend
how the business performed in the past. On the other hand, Management accounting
is used by managers and supervisors to make assumptions about a business' daily
operations. Instead of using past data or performances, it is based on current and
emerging trends. To sum up, Financial Accounting is for the external parties and
Management Accounting is for internal parties.

Orientation and Time Span (OATS)

Financial Accounting is historical in nature wherein it gives information based
on related past events. Financial statement is not entirely backward-looking and the
external users are the who make forecasts on their own based on these statements.
Meanwhile, Management accounting is more on forward-looking. It is based on past
and future events just like forecasting and planning that assist the users in estimating
the impacts of multiple events to achieve their objectives and goals.
Furthermore, Financial Accounting and Management Accounting differ on
their time span. Financial accounting prepares its financial statements and financial
reports for a specific period. It can be issued quarterly or annually to be
communicated to the users. On the other hand, the reports in management
accounting are prepared whenever the need arises.

ROS (Roles in Organization's Strategy)

In an organization's financial strategy, financial accounting and managerial

accounting complement one another. Financial accounting concentrates on an
organization's external financial procedures, whereas managerial accounting
concentrates on the internal financial processes of an organization. Professionals
considering one of these careers should understand the differences between the
disciplines
  Managerial accountants, for instance, can conduct a make-or-buy study to
assess the financial viability of making a part to aid in the manufacturing of a
product.

These accountants adopt predetermined forms and adhere to Financial

Accounting Standards Board (FASB) norms and regulations when creating financial
reports. The generally accepted accounting principles specify the rules (GAAP).
Managerial accountants, however, generally prepare their reports for internal
audiences.

DMP (Decision Making Process)

Making a decision in management accounting is as simple as selecting a plan

of action from a list of options. No choice is necessary if there are no other options.
The underlying presumption is that the best choice is the one that generates the
most profit or incurs the lowest expenses. Managerial accountants concentrate on
short-term growth plans for maintaining the economy.

Financial accounting supports decision-making in three key areas: it gives

investors a foundation for analyzing and contrasting the financial health of firms that
issue securities. Creditors can use it to evaluate a company's solvency, liquidity, and
creditworthiness. Financial accountants concentrate on long-term financial plans for
advancing organizations.

VVR (Verifiability vs. Relevance)

Relevance is the degree to which the information is useful for making financial
decisions, therefore, accounting information is important or relevant if it can help with
both anticipating future events and taking action to handle potential ones as well as
providing useful information about past events. Whereas verifiability is the degree to
which the information can be replicated using the same facts and assumptions. 
In management accounting, the focus is on providing managers with the
information they require when they need while fair reporting of operations and
financial situation is prioritized in financial accounting.