ACCA Applied Knowledge · Business and Technology · Financial information provided by business
Which of the following best describes the main purpose of financial information provided by a business to its management?
The main purpose of financial information for management is to support planning, control and decision-making. Managers need timely, relevant data to set budgets, monitor performance and choose between options, whereas statutory filing and tax calculations serve external parties and are narrower, specific purposes.
- ATo support planning, control and decision-making within the organisationCorrect
- BTo satisfy the legal requirement to file audited accounts publicly
- CTo enable tax authorities to calculate the entity's tax liability only
- DTo allow competitors to benchmark the entity's performance
Explanation
Management uses financial information to plan, control operations and make decisions. Statutory filing and tax computation are specific external purposes, not the main internal purpose. Competitor benchmarking is not a purpose of providing the information.
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