financial accounting provide financial information (profitability & financial position-P&L A/c or Statement of P&L and Balance Sheet).
Cost Accounting determines the total cost of production.
Management Accounting :-
for day to day operations & policy, management requires to make strategy/planning /policy/controlling/decision making. Management has to take decision, for this management take help of management accounting.
Management Accountant collects data of financial accounting & cost accounting by using all techniques (Accounting/Statistical & Mathematical) analysis/interpret/present this data to management for effective planning, decision making & control managerial functions. Also known as accounting for management.
Definition :- according to Anglo-American of Productivity , management accounting is the presentation of accounting information in such a way as to assist management in the creation of policy and in the day to day operations of an undertaking.
Management Accounting is concerned with accounting information that is useful to management.
Characteristics:-
- It lays more emphasis on future-management accounting is concerned with future that helps management in forecasting/planning.
- selective nature- it provides relevant information to management.
- It establishes cause and effect relationship-find out the reasons of decrease of profits and to analyze the effects of various decisions i.e. pricing promotion, cost control, sales mix etc on profitability.
- It provides information not the decision- it provides only data for decision making.
- Use of special Techniques- management accounting uses various techniques i.e. cash flow/fund flow statement, ratio analysis, budgeting control, standard costing, marginal costing etc.
- No specific formats- management accounting doesn’t provide information in prescribed format/performa.
- No specific Rules & Conventions-no specific rules arre followed.
- Optional-no statutory obligation.