Financial accounting, in contrast, must comply with laws, accounting standards, and reporting guidelines.

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Chapter 1 – The Accountant’s Role in the Organization 1.1 Management accounting refers to the measurement, analysis, and reporting of both financial and non-financial information with the purpose of supporting managers in achieving organizational objectives. Unlike financial accounting, which focuses on producing reports for external stakeholders in line with legal and professional standards, management accounting primarily serves internal decision-makers.A related field, cost accounting, involves measuring, analyzing, and reporting cost and resource data. It focuses on how resources are acquired, consumed, and allocated within the organization to support planning, control, and decision-making (Bhimani, Datar, Horngren, & Rajan, 2023).

1.2 Differences Between Management and Financial Accounting 1.Regulation: Management accounting reports are prepared for internal use, without mandatory external regulation.Financial accounting, in contrast, must comply with laws, accounting standards, and reporting guidelines.

2.Scope and Detail: Management accounting can include financial, non-financial, and qualitative information, tailored to managers’ needs. Reports may be detailed or aggregated depending on the context. Financial reports are broader and less detailed, mainly intended to provide stakeholders with an overview of the organization’s financial position.

3.Reporting Frequency: Management reports are often produced continuously—daily, weekly, or monthly—and may cover multiple years into the future. Financial reports are typically annual or quarterly.

4.Time Orientation: Management accounting is both retrospective and forward-looking, often including forecasts, budgets, and scenario analyses. Financial accounting is predominantly historical in nature. 4 / 6