Managerial accounting emphasizes the future in addition to historical reports, whereas financial accounting:
A)emphasizes a historical perspective.
B)emphasizes timeliness.
C)emphasizes a future perspective.
D)emphasizes individual organizational units.

Question

Quizplus · Accepted Answer

Financial accounting focuses on providing historical reports of a company's financial performance and situation, whereas managerial accounting involves looking towards the future in making decisions related to budgets, costs, and investments. The given scenario involves a decision regarding a potential investment in the form of remodelling a showroom and purchasing new equipment, which is a decision that would fall under the purview of managerial accounting. However, the question specifically asks for a comparison with financial accounting, and since financial accounting is concerned with historical reports rather than future decision-making, the correct choice is A.

Managerial Accounting Emphasizes the Future in Addition to Historical Reports