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Chris Martin has prepared the following list of statements about managerial accounting and financial accounting.
1. Financial accounting focuses on providing information to internal users.
2. Analyzing cost-volume-profit relationships is part of managerial accounting.
3. Preparation of budgets is part of financial accounting.
4. Managerial accounting applies only to merchandising and manufacturing companies.
5. Both managerial accounting and financial accounting deal with many of the same economic events.
6. Managerial accounting reports are prepared only quarterly and annually.
7. Financial accounting reports are general-purpose reports.
8. Managerial accounting reports pertain to subunits of the business.
9. Managerial accounting reports must comply with generally accepted accounting principles.
10. Although managerial accountants are expected to behave ethically, there is no code of ethical standards for managerial accountants.
Note: Identify distinguishing features of managerial accounting.
Identify each statement as true or false. If false, indicate how to correct the statement.
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Response guides about distinguishing features of managerial accounting
Let's discuss some basics:
Financial accounting have to comply with GAAP because information are provided to the external users such as government, shareholders etc. which requires standardization and accuracy of the records.
As discussed above external parties take decision by using financial accounting information such as investor decides about the investment in the organization. Similarly lender, supplier etc. also assess the credibility of the company. On the other hand, management accounting gives the internal reports relating to the product/process/activity. Hence one can take decisions relating to the product/division etc by using the management accounting. ...
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