Managerial Accounting vs. Financial Accounting

Managerial accounting and financial accounting both utilize in-depth fiscal understanding and money management skills to assist with business decision-making. They are essential branches of accounting that differ in the types of jobs available and the types of financial documents they create.

Having a better understanding of what each type of accounting entails can help you make a more informed decision about which one to pursue.

Managerial Accounting vs. Financial Accounting: Which Is Best for You?

Deciding which type of accounting suits you best requires you to think about what your career goals are and which type of roles fit your interests.

Managerial Accounting Degrees

Managerial accounting degrees prepare you to make financial forecast predictions and prepare performance reports to offer valuable insight to business managers. A management accounting bachelor's degree teaches you strategies and techniques for strategic financial planning. After graduating you will be qualified to take the certified management accountant (CMA) exam and become a certified management accountant.

What Is Managerial Accounting?

Managerial accounting uses cost budgeting, finance forecasting, and variance analysis techniques to develop detailed financial reports that help businesses make informed, strategic decisions for optimizing their business process and managing financial resources. Managerial accountants provide businesses with insights and performance reports that can help them operate more efficiently and improve their financial health.

What Will I Learn with a Managerial Accounting Degree?

In a managerial accounting degree, you will learn how to use accounting methods and techniques for financial planning, forecasting, and enhancing profits. You will gain an understanding of performance evaluation and internal reporting so you can work internally with businesses managers.

Managerial Accounting Degree Education Requirements

A bachelor's degree in accounting or another closely related field is the main education requirement for becoming a managerial accountant. There are some Bachelor of Science in managerial accounting programs, but most are general accounting bachelor's degrees with managerial accounting concentrations.

Working in an entry-level position as a staff accountant can give you relevant work experience to advance to management accounting roles. Earning a CMA license can help you stand out in your field by emphasizing your area of expertise.

Managerial Accounting Career Paths

Managerial accountants can choose from many different career paths. After earning a degree, graduates are prepared to analyze financial data to make strategic decisions that help businesses increase their profits and direct resources.

Managerial accounting careers include:

• internal auditor
• management accountant
• financial analyst
• cost accountant
• treasurer

Financial Accounting Degrees

Financial accounting degrees are generally offered as a Bachelor of Science in accounting which cover the process of financial accounting. The programs give students an understanding of reporting regulations set by the Financial Accounting Standards Board, which is necessary for maintaining compliance when creating financial documents. Accounting degrees already provide a broad understanding of financial accounting, but using elective courses to focus your degree gives you an even more comprehensive education.

What Is Financial Accounting?

Financial accounting is the process using accounting software to compile data to create documents like cash flow statements, financial accounting reports, and balance sheets. This branch of accounting analyzes financial information like expenses, assets valuation, and liabilities to provide companies with an overview of their financial health.

What Will I Learn with a Financial Accounting Degree?

Financial accounting degree coursework involves learning how to create financial documents and analyze data. Aside from accounting basics like auditing, taxation, and bookkeeping, you can expect to learn about corporate finance, business ethics, and financial analysis

Programs teach students how to develop financial accounting reports and statements while following standardized guidelines like the Generally Accepted Accounting Principles (GAAP) and the International Financial Reporting Standards (IFRS) to ensure accuracy.

Financial Accounting Degree Education Requirements

Education requirements ensure that financial accountants are well-prepared for handling the numerous tasks they are responsible for in their careers. Graduating with a bachelor's degree in accounting is the first step. Completing a degree program equips you with fundamental accounting knowledge. Graduates can then begin working in entry-level financial accounting positions.

After gaining work experience, some people choose to continue their education with a master's degree or earn credentials and licensure to highlight their expertise in their chosen area of specialization. These are not necessarily requirements, but they can help you reach more advanced positions and higher salaries.

Financial Accounting Career Paths

There are several financial positions available in the financial accounting field. They all involve aspects of financial management and reporting for internal and external users. Jobs are available in many different places like public accounting firms, corporate finance, and government agencies.

Financial accounting careers include:

• financial analyst
• compliance officer
• auditor
• certified public accountant (CPA)
• payroll manager

What Are the Key Differences Between Managerial Accounting and Financial Accounting?

The key differences between managerial accounting and financial accounting lie in who utilizes the reports, how they are used, and the types of financial documents the accounting professionals can create.

Managerial accounting involves:

• developing managerial accounting reports for internal use only
• working directly with business managers to make strategic financial decisions
• making financial forecasts and planning strategies to improve
• creating detailed reports about specific aspects of a company's performance
• compiling managerial accounting information on a daily basis

Financial accounting involves:

• developing financial accounting reports for both internal and external parties
• creating balance sheets, income statements, and audit reports
• compiling, analyzing, and reporting historical data
• creating generalized reports that summarize overall financial performance
• compiling information at the end of the accounting period.

How To Choose the Right Degree

Having a clear understanding of your career goals can help you make the right decision. Since most accounting programs give you the option to add an emphasis, you can begin an accounting bachelor's degree and add a concentration in financial accounting or managerial accounting once you learn which topics interest you the most.

FAQs About Financial Accounting vs. Managerial Accounting

Choosing between financial accounting and managerial accounting can be a difficult task. These commonly asked questions can give you insight into what differentiates these two types of accounting.

Do Bankers Use Financial Accounting or Managerial Accounting?

Bankers utilize financial accounting to ensure a company's financial statements follow compliance regulations. Financial accounting is useful when bankers are determining creditworthiness and evaluating the financial health of a company.

Is Management Accounting Harder Than Financial Accounting?

Often times management accounting is viewed as harder than financial accounting although they both deal with complex financial data and require precision to ensure accuracy and compliance with accounting standards.

Management accounting involves strategic planning and problem solving to specifically increase profits and is usually a demanding role working with high-level managers to make business decisions. They need to be able to analyze financial performance and give actionable advice to meet goals.

How Do the Objectives of Managerial Accounting Differ from Those of Financial Accounting?

Both types of accounting specializations involve developing reports that cover the financial health of a company. The main objective of a managerial accountant is to increase a company's profits by analyzing financial data to pinpoint issues and provide strategies to improve. The main objective of financial accounting is to accurately record financial transactions in balance sheets and income statements for external stakeholders.

Is a Managerial Accounting Degree or a Financial Accounting Degree Better?

Determining which degree is better is a personal decision related to your career goals. It is important to consider the type of roles you find most interesting and which ones fit your strengths. Knowing what managerial accountants and financial accountants deal with on a daily basis can help you make the right decision.