Financial accounting

Bound by GAAP. GAAP are represented by accounting standards $($including those issued by both the Australian Accounting Standards Board $($AASB$)$ and the International Accounting Standards Board $($IASB$)),$ the Corporations Act and relevant rules of the accounting associations and other organisations such as the ASX.

Information is often outdated by the time statements are distributed to users. The financial statements present a historical picture of the past operations of the entity.

Most financial statements are of a quantitative nature. The statements represent the entity as a whole, consolidating income and expenses from different segments of the business.

Prepared to suit a variety of users including management, suppliers, consumers, employees, banks, taxation authorities, interested groups, investors and prospective investors.

Management accounting

Much less formal and without any prescribed rules. The reports are constructed to be of use to managers.

Management reports can be both a historical record and a projection $($e$.$g$.$ a budget$).$

Much more detailed and can be tailored to suit the needs of management. of both a quantitative and a qualitative nature.

Main users are the

owner$($s$)/$managers in the entity,

hence the term management

accounting.

accounting.

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