Concept of Management and Financial Accounting

University: London metropolitan university

  • Unit No: 5
  • Level: High school
  • Pages: 25 / Words 6199
  • Paper Type: Assignment
  • Course Code: BA4F04
  • Downloads: 605
Question :

This assessment will cover the following questions:

  • Examine the function of management and financial accounting and what are the key differences between these two.
  • Analyse the profitability, debt and liquidity and investment structure of the company.
  • What are the necessary improvement that can be made to enhance performance of the company.  
Answer :


In the recent times, business units lay more emphasis on undertaking competent strategic and policy framework with the motive to make optimum use of funds. Moreover, without having wide framework business unit faces difficulty in getting desired level of outcome or success. Now, several tools & techniques are available which firm can use before taking decision pertaining to investment and financing decision. The present report is based on different case situation which will develop understanding about the concept of management and financial accounting. Further, it will shed light on the aspects on the basis of which management accounting differs from financial. Along with this, report will exhibit how concept pertaining to ratio analysis and capital budgeting aid in decision making.


Explaining Management and Financial Accounting

Management accounting:

It refers to the presentation of accounting information which in turn used by management team for the formulation of policy framework regarding day to day activities. MA assists management team in performing functions related to planning, organizing, staffing, directing and controlling. In other words, the main function of MA is to make appropriate forecast about production and selling aspects, cash inflow & outflow (Eldenburg and, 2019). In addition to this, aspects of MA also focus on identifying specific cost centre and delegation of roles and responsibilities which in turn helps in achieving success.

Financial accounting:

It implies for the collection, summarization and presentation of monetary information that resulted from business transactions. FA reports furnish information about operating profit and business value to the concerned stakeholders (Steccolini, 2019). Hence, financial accounting technique is undertaken by businesses with the motive to serve information to all the stakeholders in an acceptable and standardized format. In this way, it can be stated that financial accounting process is employed by the firm for showing financial position and performance to both internal and external stakeholders (Weetman, 2019). There are several functions which in turn associated with financial accounting aspects. This in turn includes recording of systematic records, communicating results to the stakeholders, budget preparation and cost control. It is highly significant which helps in analyzing areas where improvements are needed. In addition to this, by analyzing performance company can set appropriate budget for the upcoming time frame.

Presenting Difference between Management and Financial Accounting

Differentiation between management and financial accounting is enumerated below:

Basis of difference

Management accounting

Financial accounting


It helps management team in making effectual decisions about business.

FA refers to the classification, analysis, recording and summarization of financial affairs associated with the company (Stockenstrand and Nilsson, 2017).


MA is undertaken by the firm for offering management team with wide framework for ensuring informed decision making (Chibili, 2019).

The main motive behind undertaking financial accounting practices is to provide outside parties such as investors, creditors etc with suitable information for decisi

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