Managerial accounting
Managerial accounting produces internal financial and non-financial information so managers can plan operations, control costs, and make decisions.
Also known asmanagement accounting
See it move
The infographic is a side-by-side comparison table contrasting financial accounting and managerial accounting across five dimensions: users, time horizon, governing rules, report format, and verification. Financial accounting serves investors and creditors, looks backward using historical data, follows IFRS or GAAP, uses a prescribed format, and requires an external audit; managerial accounting serves internal managers, is forward-looking, has no mandatory rules, may take any useful form, and requires no external audit. A note below the table underlines that both systems operate within the same firm but answer entirely different informational questions.
Check yourself
A business student argues: 'Managerial accounting reports must be prepared under IFRS so that the board of directors can rely on the figures.' What is the fundamental error in this claim?