Question

In: Accounting

Following are aspects of accounting information. Classify each as pertaining more to financial accounting (F) or to management accounting (M):


Following are aspects of accounting information. Classify each as pertaining more to financial accounting (F) or to management accounting (M):

1.Primary users are external


2. Includes more non-monetary information


3. Focuses more on future than past


4.Uses many estimates and projections


5. Controlled by GAAP


6. Used in managers’ planning decisions


7. Focuses on the whole organizations


8. Not constrained by GAAP



Solutions

Expert Solution

Workings

Financial accounting is accounting which deals with financial data and financial statements. The financial statements preprared as based on historical data and driven by US GAAP. Both internal and external users are interested in the financial repports of the company. Hence, options 1, 5 and 7 relate to financial accounting.

Managerial accounting is more related to the matters internal to an organization. The managers make use of financial and non-financial information of their respective departments to make estimates and project numbers for the future. Managerial reports are not driven by GAAP and can be modified to suit the needs of the manager reviewing the same. Hence, options 2,3,4,6 and relate to managerial accounting.

ekkarill92 answered 2 years ago
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