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CMA Intermediate · Management Accounting · Introduction to Management Accounting

Which of the following is a recognised limitation of management accounting?

A recognised limitation is that management accounting depends on the quality of the underlying accounting data. If the records are inaccurate or incomplete, the analyses and recommendations built on them are unreliable. It supports managerial judgement rather than replacing it, and it is not a statutory requirement.

  1. AIt provides information to both internal and external users in statutory format
  2. BIts conclusions are only as reliable as the underlying accounting data, so errors in records carry into decisionsCorrect
  3. CIt replaces the need for managerial judgement in decision making
  4. DIt is mandatory under the Companies Act, 2013 for all companies

Explanation

Management accounting relies on data from financial and cost records, so inaccurate or incomplete base data weakens its conclusions. The other options are wrong: it serves internal users, it supports rather than replaces judgement, and it has no statutory mandate in the form stated.

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