| Advertisement |
Financial accounts detail the performance of an organisation over a defined period and the state of affairs at the end of that period.
Management accounts are used to aid management record, plan and control the organisation's activities and to help the decision making process.
Limited liability companies must, by law, prepare financial accounts.
There is no legal requirement to prepare management accounts.
The format of published financial accounts is determined by local law, by International Accounting Standards and International Financial Reporting Standards. In principle the accounts of different organisations can therefore be easily compared.
The format of management accounts is entirely at management discretion: no strict rules govern the way they are prepared or presented. Each organization can devise its own management accounting system and format of reports.
Financial accounts concentrate on the business as a whole, aggregating revenues and costs from different operations, and are an end in themselves.
Management accounts can focus on specific areas of an organization's activities. Information may be produced to aid a decision rather than to be an end product of a decision.
Most financial accounting information is of a monetary nature.
Management accounts incorporate non-monetary measures. Management may need to know, for example, tons of copper produced, monthly machine hours, or miles traveled by salesmen.
Financial accounts present an essentially historic picture of past operations.
Management accounts are both an historical record and a future planning tool.
0 comments: