Chapter 18, Problem 1QC

To determine

Managerial Accounting: The objective of management accounting is to take decisions for the business. On the basis of financial accounting information, management accounting prepares the forecast and future plans, measures risk and performance and allocates resources for optimum utilization.

To identify: The item which is not a characteristic of managerial accounting

Answer to Problem 1QC

Option ‘a’is correct.

Emphasizes the external financial statement is correct.

Explanation of Solution

External Financial Statements are prepared under financial accounting for the reference and usage of external users like investors, government, public, and media. The objective of management accounting is to help the management accountants who internal users.

Option b.

Provide detailed information about individual parts of the company.

Management Accounting classifies and rearranges the information provided by financial accounting and cost accounting. Both the cost and financial accounting cover each aspect of the company. For example financial statement for holding and subsidiary companies are prepared individually and also in consolidated form

So, option b is incorrect.

Option c.

Emphasizes relevance

Management accounting emphasizes more on relevance compared to financial accounting. Relevance means that the information offered is useful and impacts the decision of the users.

So, option c is incorrect.

Option d .

Focuses on the future.

The Management Accounting studies the past financial accounting information and analyzes them to make future-oriented plans and forecasts. The budgets, ratios, variances, and projections computed in management accounting serve as a base for decision making.

So, option d is incorrect.

Conclusion

Thus, option ‘a’ is correct among the given options.