Discuss AICPA CPA-Financial Exam Topic 1 Question 3

Which of the following is true regarding the comparison of managerial to financial accounting?

AManagerial accounting is generally more precise.

BManagerial accounting has a past focus and financial accounting has a future focus.

CThe emphasis on managerial accounting is relevance and the emphasis on financial accounting is timeliness.

DManagerial accounting need not follow generally accepted accounting principles (GAAP) while financial accounting must follow them.

Suggested Answer: D

Choice "d" is correct. Public companies must follow GAAP for (external) financial reporting purposes. GAAP need not be followed for (internal) managerial accounting purposes.

Choice "a" is incorrect. Financial accounting is generally more precise.

Choice "b" is incorrect. Managerial accounting has a future focus, while financial accounting focuses on reporting past results.

Choice "c" is incorrect. The emphasis of financial accounting is providing useful information to financial statement users (including the characteristic of relevance), while the emphasis of managerial accounting is providing timely information to management decision makers.

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8 comments · newest first

Marti 11 months ago

C seems off, financial accounting is all about accuracy too!

Weldon 12 months ago

I thought both types focused on the past, but I guess not!

Jackie 12 months ago

Wait, is it really true that managerial is more relevant?

Kaitlyn 12 months ago

Totally agree, D is definitely true.

Velda 1 year ago

Managerial accounting doesn't have to follow GAAP!

Desirae 1 year ago

This seems like a tricky question. I'll need to think carefully about the different options and how they relate to governance oversight of data protection.

Willard 1 year ago

I'm a bit confused by the options here. I know work in process is related to project efficiency, but I'm not sure how it ties to quality, utilization, or schedule. I'll have to think this through carefully.

Rebeca 1 year ago

I'm a bit confused about how the scaling rule interacts with the minimum and maximum settings. If it removes 5 instances, what happens if they go below the minimum?

AICPA CPA-Financial Exam - Topic 1 Question 3 Discussion