What are the main differences between financial and management accounting?

Financial accounting is mainly focused on the external users of the financial information. Its main purpose is to communicate the financial position of the company. Preparing the financial statements is mandatory and should follow certain accounting principles when presenting the financial information.

On the other hand, management accounting is mostly prepared for the management of the company and its main purpose is to prepare accounts that aids decision making. As such, they are optional and can be prepared and presented in any format that suits the management as a whole. Preparing management accounts are optional and is usually done on a need basis.