Indicate whether each statement describes financial accounting or managerial accounting.

A. The information is directed at external users who are making decisions pertaining to investing, extending credit, and other decisions.

B. The principal users are the organization’s managers.

C. The key focus is on the entity as a whole.

D. The rules and principles are very flexible.

E. The information gathered is usually available after an independent audit has been completed.

EA2. 1.2 Identify the following as True or False:

A. Managerial accounting reports must comply with the rules set in place by the FASB.

B. Financial accounting reports are typically general-purpose reports.

C. Financial accounting reports pertain to the entity as a whole, whereas managerial accounting focuses more on subunits of the organization.

D. The main users of the financial accounting information are the internal users.

E. Managerial reports are prepared on an as-needed basis.

F. Financial accounting reports often must be audited at least annually by an independent auditor.