Which of the following is not part of managerial accounting?
Select one:
A reporting financial information to the shareholders
B. determining whether planned goals are being met
C calculating product costs
D controlling costs
The correct answer and explanation is :
The correct answer is A. reporting financial information to the shareholders.
Explanation:
Managerial accounting focuses on providing information to internal management to assist in decision-making, planning, controlling, and evaluating the financial performance of the company. It differs from financial accounting, which is primarily concerned with providing financial information to external stakeholders, such as shareholders, investors, and regulatory bodies.
Here’s a breakdown of the choices:
- B. determining whether planned goals are being met:
This is a key function of managerial accounting. Managers use performance reports, budget comparisons, and various other tools to track the progress of the company’s goals. It allows for decision-making about adjustments needed to meet objectives. - C. calculating product costs:
A critical task in managerial accounting is calculating the costs associated with producing a product. This includes direct costs (like materials and labor) and indirect costs (like overhead). Understanding product costs helps in pricing strategies, cost control, and profitability analysis. - D. controlling costs:
Cost control is an essential part of managerial accounting. Managers track and analyze costs to ensure they remain within budget. This helps in decision-making regarding where to reduce costs, allocate resources effectively, or adjust operational strategies. - A. reporting financial information to the shareholders:
This activity falls under financial accounting, not managerial accounting. Financial accounting involves preparing and reporting financial statements such as the income statement, balance sheet, and cash flow statement, which are used by external stakeholders like shareholders, investors, and creditors to assess the company’s financial health.
In summary, managerial accounting serves internal decision-makers, focusing on operations, budgeting, cost analysis, and performance evaluation. It is not concerned with external reporting to shareholders, which is the domain of financial accounting.