Financial Accounting:

In that modern area, the focus on uniformity, consistency and standardization, there is a need of
an accounting system that understood by all and fulfills all the requirements. This accounting
system is called financial accounting. Financial accounting is concerned with the preparation of
financial statements which are most important and use by the stockholders, creditors, suppliers,
employees, customers, government agencies or banks etc. Most of the users of the financial
statements are external users.

Financial accounting emphasizes on the precision in different financial activities. The most
important thing for financial accounting is mandatory for the business, so it must follow the
GAAP (Generally Accepted Accounting Principles) or IFRS (International financial Reporting
Standards).

Managerial Accounting:

Flexibility, timeliness and forward looking is said to be the prominent trait of modern
management accounting. As the main focus of financial accounting is to finalization of accounts
of ascertain profitability in a specific time period. So, the emergence of management accounting
and cost accounting was inevitable.

Thus the main purpose of management accounting is to analyze and provides cost information to
the internal management for the planning, controlling and decision making. Managerial
accounting is concerned with providing information to managers i.e. people inside an
organization who direct and control its operations. Because it is manager oriented, so any study
of managerial accounting must be preceded by some understanding of what managers want to
do, what information managers need, and the general business environment.