Financial Accounting for Decision Makers

Activity 1.11
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SCOPE OF THIS BOOK 
15
To some extent, differences between the two strands of accounting reflect differences in 
access to financial information. Managers have much more control over the form and content 
of the information that they receive. Other users have to rely on what managers are prepared 
to provide or what financial reporting regulations insist must be provided. Although the scope 
of financial accounting reports has increased over time, fears concerning loss of competitive 
advantage and user ignorance about the reliability of forecast data have resulted in other users 
not receiving the same detailed and wide-ranging information as that available to managers.
In the past, accounting systems tended to be primarily concerned with providing information 
for external users. Financial accounting requirements were the main priority and management 
accounting suffered as a result. Survey evidence suggests, however, that this is no longer the 
case. Modern management accounting systems usually provide managers with information that 
is relevant to their needs rather than that determined by external reporting requirements. Exter-
nal reporting cycles, however, retain some influence over management accounting. Managers 
tend to be aware of external users’ expectations (see Reference 2 at the end of the chapter).
SCOPE OF THIS BOOK
This book is concerned with financial accounting rather than management accounting. In 
Chapter 2 we begin by introducing the three main financial statements: 
■ 
the statement of financial position;
■ 
the income statement; and
■ 
the statement of cash flows.
Management accounting
Nature of the
reports produced
Level of detail
Regulations
Reporting interval
Time orientation
Range and quality
of information
Financial accounting
Tend to be specific-purpose
Tend to be general-purpose
Usually broad overview
Usually subject to
accounting regulation
Usually annual or bi-annual
Almost always
historical
Focus on financial information;
great emphasis on objective,
verifiable evidence
Often very detailed
Unregulated
As short as required by managers
Often based on projected future
information as well as past information
Tend to contain financial and
non-financial information; often use
non-verifiable information
Figure 1.5 
Management and financial accounting compared
Though management and financial accounting are closely linked and have broadly common 
objectives, they differ in emphasis in various aspects.
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