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ACCA Applied Knowledge · Management Accounting · Accounting for management

Which of the following statements about the differences between financial accounting and management accounting is correct?

Financial accounting is mainly historical, while management accounting can include non-financial and forward-looking information. The other statements reverse the facts: financial accounting is the one governed by law and audited and reports on the whole entity, while management accounting is optional and often detailed.

  1. AManagement accounting must comply with company law, whereas financial accounting is optional
  2. BFinancial accounting information is mainly historical, whereas management accounting may include non-financial and forward-looking dataCorrect
  3. CFinancial accounting focuses on individual products and departments, whereas management accounting reports on the entity as a whole
  4. DManagement accounting reports are normally audited, whereas financial accounting reports are not

Explanation

Financial accounting reports mostly historical results for the whole entity, with statutory requirements and audit. Management accounting is optional, can cover products and departments, and includes non-financial and future-oriented data. The other options reverse these features.

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