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

Which statement best describes the scope of the information covered by financial accounting compared with management accounting?

Financial accounting reports on the entity as a whole, while management accounting frequently analyses parts of the business such as products, departments or divisions. Management accounting can also be forward-looking, so the claims that it is limited to historic data or the whole entity are incorrect.

  1. AFinancial accounting reports on the entity as a whole, whereas management accounting often reports on parts of the business such as products or divisionsCorrect
  2. BFinancial accounting reports on individual products, whereas management accounting reports only on the entity as a whole
  3. CBoth report only on the entity as a whole
  4. DManagement accounting is limited to historic cost data, whereas financial accounting is forward-looking

Explanation

Financial statements summarise the performance and position of the whole entity. Management accounting can analyse individual products, departments or divisions and may look ahead. The other options reverse or misstate these features.

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