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ACCA Applied Knowledge · Business and Technology · Financial information provided by business

Which of the following statements about the reporting of financial accounting information is correct?

Financial accounting information is prepared for a defined period, normally annually, and covers the entity as a whole. It is not optional, because companies must produce financial statements, and detailed product or departmental analysis belongs to management accounting rather than external reporting.

  1. AIt is prepared monthly for each department manager and covers only future periods
  2. BIt is prepared for a defined period, normally annually, and covers the entity as a wholeCorrect
  3. CIt is optional and prepared only if managers request it
  4. DIt always shows detailed costs per product line

Explanation

Financial statements cover the whole entity for an accounting period, usually a year. Departmental, product-level and ad hoc reporting is characteristic of management accounting, so the other options are wrong.

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