Which of the following is a key difference between financial accounting and management accounting?
A) Financial accounting is concerned with preparing cost analyses, whereas management accounting is concerned with creating reports.
B) Financial accounting considers such aspects as profitability, whereas management accounting does not consider profitability.
C) Financial accounting creates information for outsiders, whereas management accounting is for insiders.
D) Management accounting is based on historical data, whereas financial accounting is based on real time data.
E) Accounting knowledge creates information for all stakeholders, whereas accounting knowledge is used for internal purposes only.
Answer: C
Explanation: Financial accounting is concerned with preparing financial statements and other information for outsiders such as stockholders and creditors. Management accounting is concerned with preparing cost analyses, profitability reports, budgets, and other information for insiders such as management and other company decision makers.
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