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Financial vs. Management Accounting Accounting plays a very important role in every companys operations. It needs to maintain profits and losses of a company along with regulation of daily operations within the company. According to Warren, Reeve Duchac (2012), business is identified to carry out two types of accounting activities through management and financial accounting. Management accounting is responsible for internal decisions within a company. Decision makers are usually focused on how to maintain and raise profits along with liquidity of a company. They are also engaged in management of a company, new ways of investing and financial activities. Administration always requires information about a business entity. It helps them understand what the company has done in the past and what strategy should they choose for better results in the future (Needles, Powers Crosson, 2011). Financial accounting helps create reports and present them to executive managers of a company, who are usually called e xternal decision makers. These reports, which are called financial statements, help them evaluate companys decisions and understand whether its goals have been met or not. Financial statements show levels of profitability and liquidity of a company. Internal and external decision makers use these statements for evaluation of companys operations. No company can normally exist without financial statements as they play a central role in accounting (Needles, Powers Crosson, 2011).