Question

Which of the following statements represents a similarity between financial and managerial accounting?a. Both are useful in providing information for external users.b. Both are governed by GAAP.c. Both draw upon data from an organization's accounting system.d. Both rely heavily on published financial statements.e.Both are solely concerned with historical transactions.

Answer 1

Answer:

The answer is c. Both draw upon data from an organization's accounting system

Explanation:

The basic difference between financial accounting and management accounting is its targeted users, thus its purpose.

While financial accounting is aimed at external users, thus providing a relatively more general information about what had happened in the accounting period, Management account is made for internal users which are decision-makers with the organization, so, it has delivered a relatively more detailed information depending on the scope of information/insights needed for decision-making.

Thus:

a. is not correct

b. is not correct. Only financial accounting is governed by GAAP or other relevant accounting standards, Management account is not.

d. is not correct. One of the ultimate financial accounting's results is published financial statements ( thus, it does not rely on financial statements, yet, it makes financial statements). On the other hand, management accounting rely information from the organization's database including accounting system.

e. is not correct because for management accounting, it is for decision-making which concerns more about future results.

c. is correct because accounting system is the main database for both financial and management accounting to draw data upon; although for management accounting, their data sources may go beyond a firm's accounting system.