Financial accounting and managerial accounting have different uses for internal and external management. While one is beneficial for both, the latter is valid only for internal control. Every business undertakes various financial transactions they have to record in proper accounts. These accounts get translated into financial statements that show profit or loss for the year. Financial statements display the company's financial standing, performance, and cash flow. Interpreting these statements require proper financial analysis conducted by professionals. However, analyzing them is not a cup of tea for every user. 

Management accountants interpret financial statements and advise companies regarding adequate measures for future development. It is an internal control tool that determines prospects and avenues. The question arises: which accounting should businesses focus on in their life course. 

Both management and financial accounting have an important place in a company. While one deals with numbers and financial transactions, the other involves making accurate decisions to grow seamlessly. Therefore, both satisfy a unique need of the business. Here, we have elaborated the differences between financial and managerial accounting for a better understanding: 

Meaning:

Financial accounting identifies, records, and prepares financial statements like income statements, balance sheets, and cash flow. It collects accounting information and places it in related accounts. 

Managerial accounting uses the financial statements prepared by financial accountants to make executive decisions related to future growth. 

Users:

Financial accounting offers information for use by both internal and external stakeholders. External stakeholders involve 

Shareholders and investors use the information to think about their investment 

Creditors and lenders use it to analyze a company's financial standing and ability to repay debt and interest

Government and the public use it to ensure the company performs and utilizes its resources well and pays accurate taxes

Internal stakeholders are employees who determine the company's credibility and reputation and get a fair share of profits. The management uses it for decision-making and resource allocation. They track expenses through reports and facilitate comparisons. 

Statutory vs voluntary:

Financial accounting is mandatory per the statutes and needs presentation in the format provided by the law. It must abide by the rules and principles applicable to facilitate comparison with other companies and industries. It takes an overall look at the business operations. 

Managerial accounting is a voluntary activity. There are no specific reports formats and depend on internal management per their understanding. Managerial accounting undertakes a detailed analysis of products, services, profits, expenses, etc. 

Past vs future:

Financial accounting focuses on historical data to prepare financial statements, whereas management accounting deals with forecasts. 

Frequency:

The preparation of financial accounts is at a fixed interval like a year. In contrast, management accounting can be more frequent as per managers' discretion.