Dyson (2010) observes that accounting plays a particular and
important role in the provision of a service for a business, relating to the
collecting, storing and summarising of data, which is mainly financial, and
then conveying this information to a variety of main users who will be using
the information for different purposes. In this regard, financial and management
accounting,  two of the main areas of
accounting, both play key roles for a business in terms of providing
information to relevant parties, however, the methods vary in relation to their
usefulness and reliability. This assignment will compare and contrast these
methods of accounting in terms of their reliability and usefulness.

Usefulness

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Financial accounting is involved with the upkeep of the
accounting records, financial control and development of the accounts to
determine the amount by which income earned has exceeded expenses incurred and
thereby presenting a snapshot of a business’s financial position. This is
provided through the three key financial statements; Income and Expenditure
Accounts, Statement of Financial Position (formerly known as Balance Sheet) and
the Cashflow. In this regard, year-end financial statements provide information
in relation to how a business’s money was earned and spent in the year. The
statements will also reflect the cash flow, in and out, of a business throughout
the year. In this regard, financial accounting and the information it provides,
assists in measuring a business’s financial performance in a certain period of
time (IPA, 2012).

Management accounting, on the other hand, while still
focussing on the provision of accounting information and records, focusses on
the costs of a business in its continuing operations and activities,
incorporating other non-monetary and statistical data to assist in the
functions of costing, budgetary control and investment appraisal for the
business (IPA, 2012). The report timing between the two accounting methods also
differs. Financial accounting information is generally only issued at the end
of a reporting period. In contrast, Management Accounting information, such as cost
accounting information can be provided as and when required by management.

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