ACCA Applied Knowledge · Management Accounting · Accounting for management
Which of the following combinations correctly describes a difference between financial accounting and management accounting?
Financial accounting reports on the entity as a whole, whereas management accounting can report on products, departments, customers or activities as managers require. The other options are reversed: financial accounting is legally required and standardised, mostly historical, and annual, while management accounting is flexible and often forward-looking.
- AFinancial accounting: optional and flexible in format; management accounting: legally required and standardised
- BFinancial accounting: covers the entity as a whole; management accounting: can report on products, departments or activitiesCorrect
- CFinancial accounting: mainly forecasts; management accounting: mainly past transactions only
- DFinancial accounting: prepared monthly for managers; management accounting: prepared annually for shareholders
Explanation
Financial statements report the performance and position of the whole entity. Management accounting can analyse by product, department, customer or activity. The other options reverse the legal requirement, time orientation and frequency.
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