There are two different branches of accounting which are management accounting and financial accounting. Firstly, management accounting is the service which issues reports intended for internal managers. These reports are used for planning, forecasting and decision making. Financial accounting is the department that publishes reports for shareholders or any organization outside the company. These reports show the company's performance over previous years. The table below will clarify the differences: Description Financial accounting Managerial accounting Users Financial accounting shows business performance to people who do not work within the organization. Management accounting produces reports for managers and employees. Reports Reports published to show the performance of the entire organization to shareholders, creditors, or other organizations. Reports can be issued for the entire company, a group of departments or a single department. Information Period Used Information typically collected from company history. Current information is generally used. Objective Understand the financial situation of the company and calculate profit/loss annually. Information typically used to predict the future and solve current problems. Information also used to evaluate, control and make decisions. Format Financial accounting reports should be written in formal language and formal records, as they could be compared with those of other organizations. No special format is required. Planning Financial records help current and potential investors make decisions. . This also contributes to your credit score. Helps managers make forecasts for each department and facilitates internal decision-making, control and planning. Type of information Usually quantitative information... middle of paper ...... wedged into a car or wood used to make a board. The second division is direct labor, that is, the amount of labor the company has. Labor can be calculated individually to show the exact cost. For example, how many hours workers must work to produce a table. The third type is factory overhead; it refers to the indirect expenses involved in a production process. This must be added to direct labor and direct materials to know exactly how much production costs. An example of factory overhead could be the factory's electricity bill. These are not the only cost classifications; there are many others, for example the classification of costs according to their relevance. In conclusion, accountants have classified costs to control them. It is easier to know exactly how much it cost the company to produce one unit. it has many aspects to make it easier for businesses to reduce costs.