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ACCA Applied Knowledge · Management Accounting · Sources of data

Which of the following is a disadvantage of using internal data sources rather than external ones for management decision making?

Internal data may not give information on the competitive environment. It reflects only the organisation's own transactions, so it cannot reveal competitor actions, market trends or economic conditions. Internal data is generally low cost, specific to the business and commonly used in budgeting.

  1. AInternal data is usually available only after payment to a third party
  2. BInternal data may not provide information on the competitive environmentCorrect
  3. CInternal data is never specific to the organisation's operations
  4. DInternal data cannot be used for budgeting purposes

Explanation

Internal data describes the organisation's own activities and so gives little insight into competitors, markets or the economy. It is normally cheap, specific to the business and widely used in budgeting, so the other statements are false.

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