Which of the following is a difference between managerial accounting and financial accounting?
A) Managerial accounting prepares a standard set of financial statements, whereas financial accounting prepares customized reports to deal with specific problems or issues.
B) Managerial accounting is intended to provide information primarily for internal stakeholders, whereas financial accounting is intended to provide information primarily to external stakeholders.
C) Managerial accounting is intended to provide information primarily for external stakeholders, whereas financial accounting is intended to provide information primarily to internal stakeholders.
D) Managerial accounting presents financial statements on a predetermined schedule, whereas financial accounting creates reports upon request by management than according to a predetermined schedule.

Question

Quizplus · Accepted Answer

Managerial accounting is used for internal decision making and planning, whereas financial accounting is used for external reporting to stakeholders such as investors, creditors, and regulatory bodies. Financial accounting must comply with specific rules and regulations determined by generally accepted accounting principles (GAAP) and the Securities and Exchange Commission (SEC), while managerial accounting is more flexible in terms of the information it provides. Therefore, B is the correct answer as it accurately distinguishes between the intended audiences of the two types of accounting.

Which of the Following Is a Difference Between Managerial Accounting