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CA Intermediate · Cost and Management Accounting · Introduction to Cost and Management Accounting

Which of the following is a feature that distinguishes management accounting from cost accounting?

Management accounting uses both financial and cost data and has no mandatory statutory format, since it is designed to help internal management in planning and decisions. Cost ascertainment, historical recording and reporting to external users belong to cost or financial accounting.

  1. AIt deals only with the ascertainment of the cost of products
  2. BIt uses both financial and cost data and is not bound by statutory format requirementsCorrect
  3. CIt is concerned only with recording past transactions in books of account
  4. DIt is prepared mainly for external users such as shareholders

Explanation

Management accounting draws on both financial and cost accounting information and presents it in whatever form helps management decisions and planning, with no prescribed statutory format. Cost ascertainment is the focus of cost accounting. Recording past transactions and reporting to external users are features of financial accounting.

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