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ACCA Applied Knowledge · Management Accounting · Accounting for management

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

Financial accounting reports on the entity as a whole, while management accounting can focus on products, departments or divisions. The other statements are wrong because financial accounts are legally required and annual, and management accounting is optional and often forward-looking.

  1. AFinancial accounting reports are normally produced monthly for managers, while management accounts are produced annually
  2. BFinancial accounting is concerned with the whole entity, while management accounting may report on products, departments or divisionsCorrect
  3. CManagement accounting is a legal requirement for all companies, while financial accounting is optional
  4. DFinancial accounting focuses on future events, while management accounting only records past events

Explanation

Financial statements cover the entity as a whole, whereas management information is often produced for segments such as products or departments. The other statements reverse the frequency, legal requirement and time orientation.

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