| lsu.edu | myLSU
LSU Online logo
Aerial view of the LSU Campus

Newsroom | Blog

What Is the Difference Between Financial Accounting and Managerial Accounting?

Jan. 13, 2022

Alt Text

The accounting industry involves many working components that require employees with a wide span of skills. While some individuals might have a knack for the field's financial side, others shine in leadership roles.

The Louisiana State University Shreveport (LSUS) online Master of Business Administration (MBA) with a Human Resource Management Concentration program offers several financial and managerial courses to prepare graduates for how these disciplines are applied in accounting.

Two Sides of the Same Coin

Managerial accounting is geared toward efficient use of resources and planning for the financial future of a business. On the other hand, by using quarterly and yearly financial reporting, financial accounting provides decision-making information for investments and resource allocation to entities outside of the organization, including shareholders, investors, tax professionals, creditors and even the media. This system allows individuals and organizations to justify investments in U.S.-based companies using apples-to-apples data comparisons.

The LSUS MBA with HR Management Concentration online program offers a handful of courses to prepare students for the complex and connected worlds of financial and managerial accounting.

ACCT 725: Intermediate Financial Accounting provides an in-depth study of financial accounting theory and practice, emphasizing the preparation of financial statements following Generally Accepted Accounting Principles (GAAP).

ACCT 710: International Accounting exposes students to issues unique to international business activities and reporting under International Financial Reporting Standards (IFRS) and U.S. Generally Accepted Accounting Principles (GAAP).

ACCT 720: Taxation for Individuals and Businesses provides broad exposure to common tax principles impacting individuals, corporations and partnerships.

It is also important to note that managerial accounting tracks costs to make informed decisions about allocating resources within a company. In contrast, financial accounting provides actionable information on the allocation of resources among companies. Management accounting is "forward-looking" as it seeks to subjectively interpret data for strategic decision-making, while financial accounting provides an objective factual presentation and analysis of past events.

Accounting and Human Resources

Organizations have come to view human resources as a labor expense and a complex contributor in business success to leverage employees' talents and skills properly. This change in perspective has led companies to develop human capital management strategies to maximize investments in employees. These strategies require grounding in both financial and managerial accounting principles.

Furthermore, since HR executives have taken on more prominent leadership roles within their organizations, they must be trained to speak the management language: accounting.

Applications Within Managerial Accounting

Professionals in managerial accounting analyze scenarios, interpret data, identify needs and communicate findings using the following methods:

  • Capital budgeting: reviewing proposals, determining what products and services to offer and evaluating financing methods using metrics including net present value and internal rate of return
  • Product costing and valuation: calculating and allocating direct and indirect costs ("direct" includes costs attributed to production like raw materials and machinery, while "indirect" includes overhead charges like monthly rent and utilities)
  • Trend analysis and forecasting: examining trends and variances in order to project what will happen in the future, such as consumer behavior and sales volume

Applications Within Financial Accounting

Financial accountants and those applying the discipline in HR use GAAP standard accounting practices to assemble accurate financial data into reports. Individuals utilize information from high-level data collections, invoices, accounts receivable balances and other sources such as:

  • Profit and loss statements: Also known as the income statement, this report includes the company's revenues and expenses during a reporting period. It offers insights into a company's operations and management efficiency.
  • Balance sheets: This report shows assets and liabilities, along with shareholder equity, following the end of a reporting period. It also shows the financing of assets.
  • Cash flow statements: This provides a measure of how well a company manages and generates funds by detailing cash inflows and outflows for a reporting period.

HR leaders use these accounting systems to identify how human resources tie into organizational past performance and future goals. Often, bonuses and a percentage of pay may be tied to effective performance in these regards, which makes extensive training in both financial and managerial accounting imperative in an HR-focused MBA program.

Learn more about the LSUS online MBA with an HR Management Concentration program.

Newsroom



Media Contact

Charlotte Bencaz
225-578-8460
cbencaz@lsu.edu

Ready to reach your goals?

Take the first step forward by completing the form and our enrollment team will contact you soon to discuss:

  • What program meets your academic and career goals
  • Financial aid options (employer funding, military benefits)
  • Receiving credit for past education (transfer, professional development)
  • The admissions process and timeline

Discover LSU’s World-Class Online Degrees


I agree to the Privacy Agreement