Managerial accounting:
A) is more future oriented than financial accounting.
B) tends to summarize information more than financial accounting
C) is primarily concerned with providing information to external users.
D) is more concerned with precision than timeliness.
The correct answer and explanation is :
The correct answer is:
A) is more future oriented than financial accounting.
Explanation:
Managerial accounting is primarily concerned with providing information for internal decision-making and planning. It focuses on helping managers make informed decisions that affect the future performance of the company. This is why it is more future-oriented than financial accounting, which tends to focus on the company’s past performance.
Here’s a breakdown of the other choices:
B) tends to summarize information more than financial accounting:
This statement is incorrect. Financial accounting is more focused on summarizing financial data for external users, such as investors, creditors, and regulators. It involves preparing standardized financial statements such as income statements, balance sheets, and cash flow statements, which provide a summarized view of the company’s performance and financial position. In contrast, managerial accounting provides detailed, specific information tailored to the needs of internal managers. It often involves data that is more granular and focused on the details of operations, costs, and performance metrics.
C) is primarily concerned with providing information to external users:
This is a characteristic of financial accounting, not managerial accounting. Financial accounting focuses on creating reports for external stakeholders, such as shareholders, creditors, and tax authorities. The goal is to provide a clear, accurate, and standardized picture of a company’s financial performance and condition. In contrast, managerial accounting is designed to help managers make decisions within the organization, so it is mainly focused on internal use.
D) is more concerned with precision than timeliness:
This statement is also inaccurate. Managerial accounting tends to prioritize timeliness over precision because managers need to make decisions quickly. The information does not always need to be perfectly precise as long as it is actionable and timely. On the other hand, financial accounting requires precision and accuracy, as its reports are used by external parties to assess the financial health of a business.
In conclusion, managerial accounting is more future-oriented because it is geared toward helping managers make decisions that will influence the company’s future direction and performance. It emphasizes planning, budgeting, forecasting, and decision-making to guide the company toward achieving its objectives.