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

Which of the following statements about the two branches of accounting is correct?

Financial accounting reports typically cover the entire entity for a year, while management accounting reports can be about a single department, product or short period such as a week. Management accounts are not statutorily audited or bound by IFRS.

  1. AManagement accounting reports must be audited each year under company law
  2. BFinancial accounting reports usually cover the whole entity, while management accounting reports may cover a single department, product or short periodCorrect
  3. CFinancial accounting information is normally produced weekly to help control costs
  4. DManagement accounting must comply with IFRS Accounting Standards when reports are issued to managers

Explanation

Financial statements present the whole entity, typically annually. Management reports can be on any segment and any frequency, such as a department weekly. Management accounts are not subject to statutory audit or IFRS compliance, and financial statements are not normally weekly.

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