30. Which of the following statements is correct?

A. Financial Accounting is a legal requirement. It is concerned with producing the accounts of an entity, and is produced for stakeholders. Management accounting is not a legal requirement, and is for use within the company.

B. Financial Accounting is a legal requirement. It is concerned with the financing of the entity. Management accounting is also a legal requirement, and together they are used to produce the accounts of the entity.

C. Financial Accounting is not a legal requirement. It is concerned with the cash flow of the entity. Management Accounting is a legal requirement, and this is used to produce the accounts of the entity.

D. Financial Accounting is not a legal requirement. It is concerned with the financing of the entity. Management accounting is also not legally required, and is for use within the company.

Answer : A

Financial Accounting is used to draw up the accounts that companies have to produce by law. It will allow an organisation to see how much profit there is (and therefore how much tax to pay). Financial statements can be viewed – plc are available directly, limited companies via Companies House. Management accounting is not a legal requirement, but is a useful management tool. It allows the organisation to investigate WHY the figures are what they are. What exactly made THAT level of profit? These are internal, and not disclosed.