What is the difference between Management Accounting & General Accounting?
We all know about the word “Accounting” but do we truly understand it? Accounting knowledge is vital to understand investments, manage personal finances, and participate in the business world.
There are many myths about management accounting and general accounting.
Let’s understand the facts.
The main difference between management accounting and general accounting is. General accounting is the collection of accounting data to create financial statements, while management accounting is the internal processing used to account for business transactions.
What is Management Accounting?
Management Accounting is the process of creating company goals by identifying, measuring, analyzing, interpreting, and communicating information to manage.
It focuses on all accounting aimed at informing management about operational business metrics. It uses information relating to costs of products or services purchased by the company.
Specifically, Management Accounting is for:
- Helping forecast the future
- Helping In make-or-buy decisions
- Forecasting cash flows
- Helping understand performance variances.
- Analyzing the rate of return
- Management accounting helps managers within a company make decisions
What is General Accounting?
A niche thing for any business owner is to know about general accounting. General accounting essentially refers to general ledger collection and accounting activities that include account charges in credits and debits and documenting financial statements for a quarter, calendar or year.
Specifically, General Accounting is for:
- Oversight and maintenance and of the general ledger
- Accounting for the Endowment
- Accounting for fixed assets, including depreciation
- Journal entries and non-salary transfers
- Bank reconciliations
- Monthly and year-end closings
Every small business investor, company leader, or business owner must have been called upon to manage accounts one way or the other. Accounting plays a very crucial role in your success.
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