The basic difference between management and financial accounting is that:
A) the financial accounting system relies on accounting information, whereas management accounting does not.
B) financial accounting relies on information gathered from sources outside the business, whereas management accounting relies on internally generated information.
C) financial accounting is concerned with providing information to outsiders, whereas management accounting is concerned with providing information to managers for their use in directing the activities of the organisation.
D) None of the above is correct.

Question

Quizplus · Accepted Answer

Financial accounting is focused on providing information to external parties such as investors, creditors, and regulatory agencies. Management accounting, on the other hand, is focused on providing information to internal managers to aid in decision-making, planning, and control. The information provided by financial accounting is generally historical and prepared according to accounting standards, while management accounting information is tailored to the specific needs of the organization and can include both financial and non-financial information. Therefore, option C is the best choice.

The Basic Difference Between Management and Financial Accounting Is That