AICPA Exam CPA-Financial Topic 1 Question 3 Discussion

Actual exam question for AICPA's CPA-Financial exam

Question #: 3
Topic #: 1

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.

Show Suggested Answer

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.

by Arminda at May 05, 2022, 05:56 PM

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