Financial Accounting vs. Management Accounting

In accounting, a distinction is made between financial accounting (FIBU) and management accounting (BEBU). Learn about the differences through our article!

Financial accounting (FIBU)

The financial accounting records ongoing business transactions. Using the balance sheet, the financial situation is assessed and using the income statement, the profit or loss is determined. Some companies additionally perform a cash flow statement, which is used for liquidity management/financial planning. Financial accounting is mandatory for certain companies and then follows commercial and tax regulations. Financial accounting is also referred to as external accounting, since it is mainly directed at external stakeholders (shareholders, creditors, the state, etc.) and simultaneously forms the basis for corporate accounting.

Management accounting (BEBU)

Corporate accounting, also known as "cost accounting," represents the internal accounting of a company and records the costs and revenues of individual products and services. No company is obligated to maintain cost accounting, nevertheless, management accounting is an essential tool for calculations as well as for cost and performance control, serving as an objective basis for management. For instance, management accounting also considers equity interest in addition to debt interest.

The management accounting is divided into three stages:1. Cost type accounting: What costs have been incurred? (Recording)2. Cost center accounting: Where have the costs been incurred? (Distribution)3. Cost unit accounting: What are the costs for? (Allocation to cost units)The distribution and allocation of recorded cost types are generally done in tabular form using a so-called cost accounting sheet (BAB).