ACCA Applied Knowledge · Financial Accounting · Stakeholders' needs
Which of the following is a reason why published financial statements are unlikely to meet all the information needs of a company's senior management?
Published financial statements are mainly historic and summarised, so they lack the detail, timeliness and forward-looking data that senior management needs for planning, control and decision-making. They are prepared for external users, so managers also require separate management information.
- AThey are prepared only for the tax authority
- BThey are mainly historic and summarised, so they lack the detail and forward-looking data needed for planning and controlCorrect
- CThey are prepared using a different currency from that used internally
- DThey are produced so frequently that they cannot be reviewed
Explanation
Financial statements are historic, aggregated and issued periodically for external users, so managers also need detailed, timely and forward-looking management information. They are not prepared only for tax authorities, and they are produced annually or half-yearly, not too frequently.
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