What is accounting?

Accounting is the process of identifying, measuring and communicating economic information about an entity to a variety of users for decision making purposes

What is the difference between Financial Accounting and Management Accounting?

• Financial accounting is the preparation and presentation of financial statements to allow users to make economic decisions about the entity
• Financial statements consist of
• Statement of cash flows
• Balance sheet
• Income statement
• Statement of changes in equity
• Management accounting provides economic information for internal users
• Core activities include
• Formulating plans and budgets
• Providing information to be used in monitoring and control within the entity
• Management accounting provides economic information for internal users that is then reflected in financial accounting statements for external users

	Financial accounting	Management accounting
Regulations	Bound by GAAP, Corp Act, ASX, etc	Less formal and without prescribed rules
Timeliness	Historical picture of past operations	Can be both a historical record and a projection
Level of detail	Quantitative in nature, concern the whole entity	Both quantitative and qualitative, more detailed
Main users	External: ATO, investors suppliers, consumers, banks, employees, interested groups	Internal: managers in the entity

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