Financial Accounting MCQs With Answers (2)

Financial AccountingWatching this resources will notify you when proposed changes or new versions are created so you can keep track of improvements that have been made. However, financial reports must conform to International Financial Reporting Standards (IFRS) and International Accounting Standards (IAS). Financial reports are more standardized, while management accounting formats are more ad hoc and can vary widely within and among organizations. Financial accounts are highly summarized, representing an aggregate of entities, activities and operations for the whole organization, including any subsidiaries.” The focus of management accounts is much narrower, dealing with specific activities, cost centres, sections or departments.Financial Accounting

Financial reports deal almost exclusively with financial information; the majority of information in a financial report is monetary (has a dollar value). Management accounts utilize both monetary and non-monetary measures – financial and non-financial information. Financial accounts are strictly historical representations of an organization’s operations for an accounting period.

Management accounting would be concerned with inventory levels, whereas financial accounting would be focused on the valuation of inventory. Information is produced to satisfy the needs of its internal and external users of an entity, and the two branches of accounting take this into account. Timeliness of external financial reporting is governed by law, where as no time restriction to report in respect of management accounting reports. Financial accountants generally report their findings to both internal parties (managers and executives) and external parties (stockholders, IRS) whilst cost accountants only report their findings internally.

Financial accounting is primarily a reporting and controlling business function whilst cost accounting is a function aimed at making the business more efficient through driving change. Cost accounting is normally used to help the business make tactical decisions to improve business processes whilst financial accounting helps the business to understand its overall financial performance.

Financial accountants need to understand cash flow, tax liabilities, turnover, profit margins and the like. Both types of accounting can help to manage risk and increase understanding of the finances of a business and how to improve them. It devices and implements appropriate methods to analysis and interpret the Inflation on the Financial Information.

Financial Accounting