Which of the following statements is a difference between financial accounting and managerial accounting?
A) Under financial accounting, reports are prepared using GAAP, whereas under managerial accounting, information that is useful to management for its decision making is not recorded using GAAP.
B) Financial accounting focuses on providing information for internal use, whereas managerial accounting focuses on providing information for external use.
C) Under financial accounting, reports are prepared as and when management needs them, whereas under managerial accounting, reports are prepared on a monthly basis.
D) Financial accounting has a subjective approach, whereas managerial accounting has an objective approach.

Question

Quizplus · Accepted Answer

The statement that correctly distinguishes between financial accounting and managerial accounting is that under financial accounting, reports are prepared using Generally Accepted Accounting Principles (GAAP), whereas under managerial accounting, information that is useful to management for its decision making is not required to be recorded using GAAP. Financial accounting is focused on providing information for external stakeholders, such as investors and creditors, while managerial accounting is focused on providing information for internal use by management to make informed decisions. The frequency of reporting may vary based on the needs of the organization, and neither financial accounting nor managerial accounting has a subjective or objective approach.

Which of the Following Statements Is a Difference Between Financial