What is managerial accounting and how is it different from financial accounting?

Managerial accounting is a form of accounting that looks at an organization’s finances from the perspective of its management. It is used to provide managers with key financial information and insights in order to make informed decisions about the future. Managerial accounting differs from financial accounting in several ways, most notably in terms of purpose and focus. Whereas financial accounting focuses on summarizing a company’s past performance for external stakeholders such as shareholders and creditors, managerial accounting provides data specifically tailored for internal decision-making purposes within the organization.

Additionally, financial statements produced by managerial accountants are often more detailed than those from public financial accounts. For example, while public accounts might only present summary levels of profitability or cash flows over a period of time, managerial accounts will go into greater depth to show sales figures broken down by product type or region as well as operational expenses linked to each segment. These kinds of analyses can give managers valuable insights into which areas are performing better than others so they can develop appropriate strategies accordingly.

Finally, whereas financial reports must follow certain standards set out by regulatory bodies like Generally Accepted Accounting Principles (GAAP), no such regulations exist for managerial reports allowing them greater flexibility when presenting their findings according to specific needs of the company without having to worry about compromising accuracy due to any changes made along the way. All these factors together help demonstrate why managerial accounting continues being an invaluable tool when it comes providing organizations with important data necessary for making sound business decisions going forward.