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compare and contrast financial and management accounting
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In this essay, I will compare and contrast financial and management accounting and how they differ; as well as the extent the two approaches reflect the different purpose and role by using academic journals throughout for my research.
Financial accounting can be defined as the process of identifying, measuring, classifying, accumulating, summarizing, and communicating information about economic entities that is primarily quantitative and is useful to decision makers (Seidman, 2005).
Accounting information is designed to be used in making financial decisions. It is primarily quantitative in nature, and it relates monetary information to a specific entity. Senior management and outside investors rely on the information provided by a firm's financial accounting system. They want to project future cash flows, revenues, or profits and use that information when evaluating the performance of organisation or assessing the feasibility of granting a requested line of credit (Seidman, 2005).
The primary role of accounting information is to provide information for decision-making purposes. Both financial and management accounting relies on the same basic accounting database. However, there are important differences between the two disciplines. Neither financial nor management accounting is a subset of the other. They each have a distinct purpose and
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