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Financial Accounting

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Management Verses Financial Accounting

FINACT-VGR9OK

Which of the following statements related to the similarities and differences between management and financial accounting are TRUE?

Select ALL that apply.

A

Management accounting is used primarily for internal reporting purposes while financial accounting is used primarily for external reporting purposes.

B

Management accounting must follow Generally Accepted Accounting Principles (GAAP), but financial accounting does not.

C

Management accounting focuses on the past performance of the company while financial accounting focuses on the future performance of the company.

D

Management accounting uses estimates extensively and thus does not require the degree of accuracy necessary for financial reporting purposes.

E

Accuracy of information trumps timeliness for management accounting purposes, but timeliness trumps accuracy for financial reporting purposes.

F

Information generated by a management accounting system is used primarily for the efficient operation of the company while information generated by a financial accounting system is used primarily by investors and creditors in their role as capital providers to companies.