Question

Which of the following statements are true relative to management accounting?

 A. Management accounting is only concerned with historical information.

 B. Management accounting provides information to help plan short-, medium- and long-term operations.

 C. Management accounting is solely guided by accounting principles.

 D. Management accounting reports only to external parties.

 E. Management accounting information is primarily for internal use.

 F. Management accounting information can be both financial and non-financial.

 G. Management accounting is never detailed. H. Management accounting is highly regulated.

Answer 1

Answer is B, E, and F

Explanation:

Management accounting is concerned with future information. It helps with future information for decision making purpose. It is not concerned with historic information like financial accounting. Management accounting is not guided by accounting principles and concepts. Also it is not regulated like financial accounting by various statutory bodies for example: FASB, SEC, etc . It has no reporting standards and reports are more of customised needs of management. Management accounting reports only to internal parties mainly the managers since it helps them in various decision making. Management accounting is a detailed accounting since it is required for operational and strategic decision making. The various types of decision making with management accounting are.

· Continue or discontinue of product, division or segment

· Make vs. Buy analysis

· Acceptance of special order

· Retain or replace decision

· Shutdown vs. Continue decision

· Product costing and product pricing

· Profitablity Statement and analysis

· Break even analysis and margin of safety analysis

· Product mix decisions.