Discuss how a managerial accounting report prepared for an internal user might differ from a financial accounting report prepared for an external user
Managerial accounting reports prepared for internal users are generally characterized by the following:
· They do not have to follow standardized rules set by an authoritative body.
· They are typically more detailed than financial reports.
· They are more future-oriented.
· They are focused on the needs of the user.
· They are timelier and more relevant.
(This is not an exhaustive list.)
In contrast, financial accounting reports are generally characterized by the following:
· A lack of flexibility as its content is often dictated by the user.
· The reporting of past events using historical costs.
· The focus of reporting is on the business as a whole rather than individual segments of a company.
· The reports are prepared in accordance with GAAP.
(This is not an exhaustive list.)
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