List six differences between financial accounting and managerial accounting.

Financial Accounting

Managerial Accounting

Primary Users

External – Investors, creditors

Internal - the company’s management and employees

Purpose of information

Help investors and creditors make investment and credit decisions

Help managers and employees plan, direct, and control

Focus and time dimension of the information

Relevant and faithfully representative information and focus on the past

Relevant information and focus on the future

Rules and restriction

GAAP are followed

Not required to follow GAAP

Scope of information

Summary reports are prepared on the company as a whole

Detailed reports prepared on parts of the company

Behavioural

Concern about the adequacy of disclosures

Concern about how reports will affect employee behaviour.