Question

In: Accounting

“Consider the following short descriptions. Required: Indicate whether each description relates more closely to a major...

  1. “Consider the following short descriptions.

Required: Indicate whether each description relates more closely to a major feature of financial accounting or management accounting.”

  1. Report on past performance to external parties
  2. Inform internal decisions made by employees and managers
  3. Provides information to stockholders and creditors
  4. Has less flexibility
  5. Is characterised by detailed reports
  6. Is future oriented
  7. Field is less sharply defined
  8. Behavioural impact is secondary
  9. Delayed, historical
  10. Is constrained by regulations

Solutions

Expert Solution

i. Report on past performance to external parties

Financial Accounting

It provides information about the financial performance that have already taken place. This information is mainly used by external parties who are not in part of the entity's decision making process.

ii. Inform internal decisions made by employees and managers

Management Accounting

It Provides information to management for planning and co-ordination.

iii. Provides information to stockholders and creditors

Financial Accounting

The users of financial accounting statements are shareholders, creditors, financial analysts and
government and its agencies, etc.

iv. Has less flexibility

Financial Accounting

Financial accounting has less flexibility since it is constrained by GAAPs.

v. Is characterised by detailed reports

Management Accounting

managerial accounting produces very detailed reports. Concerned about details of entity, products, department, territories etc.

vi. Is future oriented

Management Accounting

managerial accounting has future orientation since it uses formal budgets as well as historical records.

vii. Field is less sharply defined

Management Accounting

In management accounting has the field less sharply defined. It has heavy use of other discipline i.e economics, decision sciences and behavioral sciences.

viii. Behavioural impact is secondary

Financial Accounting

In financial accounting behavioral impact is secondary i.e it concerns the measure of performance of business by communicating and measuring economic phenomenon.

ix. Delayed, historical

Financial Accounting

It records historical data that is the transactions which have been already occured.

x. Is constrained by regulations

Financial Accounting

Financial accounting is a legal requirement. It is necessary to maintain the books of accounts and prepare financial statements there from. It is also obligatory to get these financial statements audited.

ekkarill92 answered 2 years ago
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