 When considering managerial accounting, we can't compare it to the other major form of accounting which is financial accounting. There will be overlap between managerial accounting and financial accounting, but the major difference when we consider managerial accounting is that our main focus is for management. Our main focus is for management's use, management's goal to make decision making for the company. So managerial accounting is geared towards decision making processes, making reports for management. If we contrast that to financial accounting, financial accounting is the creation of the financial statements ultimately. We're entering data, we're going to create the financial statements, the balance sheet, the income statement, the statement of equity, and we could use that by management, however the primary goal and the way it is constructed is actually for external users. So when we make the financial statements, when we think about financial accounting, everything that we put together is really geared towards the eyes and the objectives and the goals of external users, people like investors, people like creditors. They're not designed necessarily or ultimately solely for the primary purpose being the management. Usually, when we think about this, we think, hey, wait a second, the financial statements are basically all of the financial data. So wouldn't the manager, wouldn't management need to be using the same income statement, balance sheet statement of equity when making decisions as would be the external users? And the answer is yes. The management will be using that information. The financial data that we're putting together will be used for the managerial accounting as well. But the managerial accounting isn't restricted in the same way as we are with the financial statement reports because the financial statement reports are really geared to and there's going to be restrictions on in terms of regulatory restrictions so that the financial statements are proper and for the best use of is the goal for external users. So although they're going to be the same financial data for the managerial accounting, we can do other things with it outside of just the norm of the financial statements. We can customize them in other words, make custom reports for management for decision making processes. So everything that's going to flow forward in terms of what's the difference between managerial accounting and financial accounting will gear back to this answer. It seems fundamental. It seems basic, but everything stems from this and that is that managerial accounting is for management. It's for internal users as opposed to external users. It's for the decision making processes for that management to make decisions about future decisions as opposed to external users to make sure that they have the information they know they need typically for investment decisions or credit type decisions. So given that given that managerial accounting is for management, let's think of some of the differences and it's always useful to think about the differences in contrasting the financial accounting versus managerial accounting. So who are the users for financial accounting and managerial accounting? The users are going to be external for the financial accounting. Managerial accounting are going to be internal. And again, that's the major focus, the financial accounting. Although we use the same information, the information is designed and put together in such a way and regulated to be put in together in such a way so that external users can trust it, be able to know exactly what's going to be expected from it and be able to use those external users being investors, creditors. In the managerial accounting, we're talking about internal users. So we don't have that same problem of the internal users trying to print reports that might be deceptive to themselves or anything like that. And therefore management can print their internal reports in more of a free way however they want to create their reports or put the numbers in order to make the best decisions. So most of the differences between these two types of accounting will fall into alignment with this major difference here. Who are we focused on? Internal users or external users? Then we have the reason for the accounting. The external decision making in terms of financial accounting is what we're putting this together for. So we're looking for the external users, investors, creditors. They want to make investment decisions. Should they put their money into the business? Should they invest in the stock? Should a bank loan money to the organization? Those things, they need, in order to make those decisions, they need some financial statements that they can rely on, numbers they can rely on, and those numbers need to be based on what they want to know. Typically picture typically the full company, how's the company doing as a whole. Managerial accounting is going to be focused on managerial planning type decisions. So that means that the whole purpose is to really take that information and put into a plan for the future. Now note that there is overlap of course because if I'm thinking about investing in the company, I might do my own kind of projections and try to think about what are they going to do in the future? Do they have a good plan? Is it going to be a good plan? However, really the investors are trying to see where a company stands at this point in time. It might not be getting so much into the nitty gritty as managerial accounting may do to take these numbers and use them to make more detailed projections, especially about a piece by piece unit by unit area by area department by department of the company. And then we've got flexibility. The financial accounting is going to be limited by regulations and generally accepted accounting principles in the U.S. Typically, there's going to be limitations and the reasons for those is because these external users need to know what they're getting. They need some form of standardization so that they can compare this company's financials to other company's financials. And therefore financial accounting is going to be much more standardized. It's got to be in order to build trust with the public. If we're trying to get investments from the public, then we have to be in alignment with standards that the public can't expect so that they can read what we're giving to them and be able to compare and contrast what's being given with other companies. So when we think about the financial statements, then we know exactly what to expect for the most part because it's regulated. We have a standardized format and we have to have that standardized format in order to make these comparisons in order to make trade and investment and transactions as easy as possible.