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CSEET · Fundamentals of Accounting · Basic Concepts and Principles of Accounting

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

Management accounting provides information mainly for internal decision making by managers and can include forecasts, estimates and non-financial data. Financial accounting, by contrast, follows prescribed standards and formats, serves external users and is largely based on past recorded transactions.

  1. AIt is prepared mainly to meet statutory requirements for shareholders
  2. BIt must strictly follow Accounting Standards in its format
  3. CIt provides information mainly for internal decision making and may include forecasts and estimatesCorrect
  4. DIt deals only with past recorded transactions in money terms

Explanation

Management accounting serves internal managers, so it can use estimates, projections and non-monetary data and has no prescribed format. Statutory format, standards compliance and a purely historical focus describe financial accounting, which is why the other options are wrong.

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