ACCA Applied Knowledge · Financial Accounting · Stakeholders' needs
Which of the following best describes a key difference between management accounts and published financial statements prepared under IFRS?
Management accounts are prepared for internal decision making and can take whatever format managers find useful, while published financial statements are prepared for external users and must follow a regulated framework such as IFRS Accounting Standards and company law.
- AManagement accounts must follow IFRS Accounting Standards, whereas published financial statements may take any format
- BManagement accounts are prepared for internal decision making and can take any format, whereas published financial statements follow a regulated frameworkCorrect
- CManagement accounts are prepared mainly for shareholders, whereas published financial statements are for managers
- DManagement accounts must be audited, whereas published financial statements need not be
Explanation
Management accounts serve managers and have no mandatory format or regulation. Published financial statements are prepared for external users under IFRS and law. Option A reverses the position, and option C reverses the intended users.
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