Management accounts provide information about a business’s current financial situation. Business owners can use the profit and loss information provided to them through these accounts to help with their business planning activities.
The difference between management accounts and financial statements
Financial statements focus more on being comprehensive and meeting regulatory standards before they get published publicly. Whereas management accounts aim to provide information that can help inform decisions.
Financial statements may seem less detailed at first. However, they are still comprehensive. Transactions are often grouped together instead of being fully listed. This helps keep the statements concise.
Management accounts are often much more detailed to provide more comprehensive information for decision-making. They may be presented in a variety of ways according to the accountant or other stakeholders’ preference.
Financial statements cover specific periods, such as a calendar or tax year, or a quarter. Management accounts can use information from a variety of time periods, either to invite comparisons (e.g. year-on-year information or month-to-month) to derive more specific information.
They may also include forecasts based on previous information. These accounts can help inform a strategic decision by giving a fuller picture of a business’s financial performance in specific circumstances rather than just over time.
Financial statements focus on assets and how much a business is worth, rather than looking at cash flow and productivity.
Types of accounting professionals
The types of accounting professionals that produce these reports are also different. Certified Public Accountants produce financial statements and Certified Management Accountants produce management accounts.
J Sweeney Accountants can help businesses to produce their accounts and financial statements. Our small business accounting services can provide both services to businesses that may not have the internal expertise to do it themselves, saving them time and money.
Get in touch by calling 01604 950034 or emailing [email protected] today.
