I want to add a small discussion on accounting and its difference with managerial accounting, because a lot of readers are confused on this matter, when learning how to write financial statements and its analysis. First, accounting is a very broad branch of the business industry. It, actually, covers various specializations, all bear distinct descriptions by themselves. The three (3) broad areas of accounting: public accounting, governmental accounting and management accounting.
Second, now you know that management accounting is just a part of accounting in the big picture. Yet, it is its biggest area and, also, has a number of departments, like tax accounting, internal auditing and financial analysis accounting, which is our concern for this series.
“Management accounting is the process of identification, measurement, accumulation, analysis, preparation, interpretation, and communication of financial information utilized by management to plan, evaluate, and control within an organization and to assure appropriate utilize of and accountability for its resources. Management accounting also comprises the preparation of financial reports for non-management groups such as shareholders, creditors, regulatory agencies, and tax authorities.”
– National Association of Accountants