Question

Financial accounting information and managerial accounting information have a number of distinguishing characteristics. For each of the characteristics listed below, indicate which characteristics are more closely related to financial accounting and which characteristics are more closely associated with managerial accounting.
1. General-purpose reports
2. Reports are used internally
3. Prepared in accordance with generally accepted accounting principles
4. Special purpose reports
5. Limited to historical cost data
6. Reporting standard is relevance to the decision to be made
7. Financial statements
8. Reports generally pertain to the business as a whole
9. Reports generally pertain to subunits
10. Reports issued quarterly or annually

Answer 1

Answer:

Characteristics more closely related to Financial Accounting:

A - 1

B - 3

C - 5

D - 6

E - 7

F - 8

G - 10

Characteristics more closely related to management accounting:

A - 2

B - 4

C - 9

Explanation:

Characteristics more closely related to Financial Accounting:

A - general purpose reports: financial accounting takes a general and broad overview look on the company's affairs. This cannot be said of management accounting.

B - Preparation in accordance with relevant Generally Accepted Accounting Principles is one of the fundamentals of financial accounting. Unlike management accounting.

C - financial accounting uses historical bases in valuation of its cost items. Unlike the management accounting.

D - Reporting standards is crucial to the presentation of financial statement and eventual decision making. This cannot be said of management accounting.

E - Financial statement is simply the medium through financial accountant communicate their findings. This is not the same as management accountant.

F - Reports generally centers on the business in financial accounting than management accounting.

G - Financial statement are issued quarterly - interim, or annually - year end. This is unlike management accounting that is most time discretional.

Characteristics more closely related to management accounting than financial accounting:

A - reports are used internally. Management reports are specific to a particular line of company's business. The reports are thus to be used by management.

B - Management reports are more specifically focused. This further buttresses point A above.

C - management reports in its specifically focused drive generally focused on sub units. This cannot be said of financial reports.