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

Kestrel Ltd's production director asks for a forecast of next quarter's cost per unit under three different production volumes. Which feature of management accounting does this request best illustrate?

The request illustrates that management accounting provides forward-looking information for planning and decision-making. Forecasting unit costs at different volumes is an internal, future-oriented analysis, whereas financial accounting mainly reports past transactions in a standardised form to external users.

  1. ALegal obligation to report to shareholders
  2. BForward-looking information used for planning and decisionsCorrect
  3. CStrict adherence to accounting standards
  4. DReporting only past transactions on a historic basis

Explanation

Forecasting costs at different volumes is planning and decision support, which looks to the future. Financial accounting mainly reports historic transactions, and the other options describe financial accounting features.

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