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ACCA Applied Knowledge · Business and Technology · Accounting and finance functions within business organisations

Which of the following is the primary purpose of the financial accounting function within a business?

The financial accounting function records transactions and prepares financial statements chiefly for external users such as shareholders, lenders and tax authorities. Budgeting and variance reporting are management accounting tasks, while investment appraisal and bank borrowing negotiations fall under financial management or treasury roles.

  1. APreparing budgets and variance reports for departmental managers
  2. BRecording transactions and preparing financial statements mainly for external usersCorrect
  3. CAdvising the board on capital investment appraisal techniques
  4. DNegotiating short-term borrowing facilities with banks

Explanation

Financial accounting records transactions and produces statutory financial statements, mainly for external stakeholders such as shareholders, lenders and tax authorities. Budgets and variance reports belong to management accounting. Investment appraisal and borrowing negotiation are treasury or finance management activities.

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