Types of Accounting

There are two types of accounting:

1. Financial
2. Managerial (cost accounting)

There are differences between financial and managerial accounting, and these differences are as follows:

• Financial accounting is for external purposes and managerial accounting is for internal purposes.
• Financial accounting is governed by GAAP, and managerial accounting does not follow any sets of standards.
• Financial accounting deals with the past, and managerial accounting accounting deals with the future.
• Financial accounting is mainly made up of reports, but managerial accounting is decision making for the company or the firm.

There are of course many other differences as well as similarities between financial and managerial accounting. But the above were the most important differences that exist between the two types of accounting.