What is the main difference between financial management and financial accounting?
According to Phillippatus, “Financial management is concerned with the managerial decisions that result in the acquisition and financing of short term and long term credits for the firm”. Here it deals with the situations that require selection of specific assets (or combination of assets), the selection of specific problem of size and growth of an enterprise. Here the analysis deals with the expected inflows and outflows of funds and their effect on managerial objectives. So, it means two main aspects of financial management like procurement of funds and an effective use of funds to achieve business objectives. The main purpose of financial accounting is to prepare financial reports that provide information about a firm’s performance to external parties such as investors, creditors, and tax authorities. . Financial accounting is performed according to Generally Accepted Accounting Principles (GAAP) guidelines.
