Final answer:
The statement is false; managerial accounting serves internal users, while financial accounting serves external users. Managerial accounting helps in decision-making with a focus on maximizing profits which includes both explicit and implicit costs.
Step-by-step explanation:
The statement that managerial accounting focuses on the needs of external users while financial accounting focuses on the needs of internal users is false. Managerial accounting actually provides information for internal management to aid in decision-making and running the company effectively, whereas financial accounting provides information that is used by external parties such as investors, creditors, and regulatory agencies. Privately owned firms use both types of accounting to track their finances and make informed decisions to maximize profits, which is the difference between revenues and costs.
Regarding profits, it's important to note that there are different ways to measure it. Accounting profit refers to the profit calculated by subtracting only explicit costs (such as materials, labor, and overhead) from revenues. In contrast, economic profit also takes into account implicit costs, which include opportunity costs and other non-monetary expenses. Understanding the distinction between these profits is crucial for internal decision-making processes, which is a core function of managerial accounting.