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

Which of the following is a characteristic of financial accounting rather than management accounting?

Financial accounting is distinguished by the requirement to follow IFRS Accounting Standards and legal rules, because its statements are prepared for external users. Management accounting is internal, flexible in format, often forward-looking and detailed by product or department, so the other options describe it instead.

  1. AReports are prepared mainly for internal managers and produced whenever required
  2. BStatements must follow IFRS Accounting Standards and legal requirementsCorrect
  3. CInformation often relates to future plans and forecasts of individual departments
  4. DReports contain detailed information on the cost of specific products

Explanation

Financial accounting produces general purpose statements for external users and must comply with law and accounting standards such as IFRS. The other options describe management accounting, which is internal, flexible in format, forward-looking and often detailed by product or department.

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