Skip to content

ACCA Applied Knowledge · Business and Technology · Financial information provided by business

Kestrel Ltd's finance director is deciding how to present information to two audiences: the bank providing a loan, and the production manager. Which statement correctly describes the difference in the information each receives?

The bank receives standardised, mainly historic financial statements, while the production manager receives tailored internal reports that can include forecasts and non-financial data. This reflects the split between financial accounting for external users and management accounting for internal decision-making and control.

  1. AThe bank receives monthly cost variance reports; the production manager receives the statutory financial statements
  2. BBoth receive the same reports because accounting information must be identical for all users
  3. CThe bank receives historic financial statements in a standard format; the production manager receives tailored reports that may include forecasts and non-financial dataCorrect
  4. DThe bank receives budgets and forecasts for each department; the production manager receives only the annual report

Explanation

External users such as lenders rely on standardised, mainly historic financial statements. Managers need tailored, timely information, which may be forward-looking and include non-financial measures. The distractors reverse the audiences or wrongly claim identical reports.

Did you get it right without looking?

One question tells you little. A timed set on Financial information provided by business shows your real accuracy, how long you take and where you lose marks.

Practise Financial information provided by businessFree diagnostic mock

More Financial information provided by business questions