Difference between accounting theory and accounting practice
Answers
Answer:
Difference between accounting theory and accounting practice
Explanation:
The users and objectives of financial accounting and managerial accounting are different.
This can be easily understood by considering that consumers of administrative accounting are internal, but users of financial accounting are external. For instance, financial accounting is used when an accountant creates financial statements for the company's shareholders (shareholders are outside of the company). However, managerial accounting is used if the accountant creates reports outlining if a product line is profitable for the management of the organisation (managers are inside of the company).
Financial accounting lays a lot of emphasis on adhering to reporting standards because it is created for external users.
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