Question

Managerial accounting involves:

a) Budgeting and forecasting
b) Financial statement analysis
c) Cost analysis
d) Internal auditing
e) Inventory management

Answer 1

Managerial accounting is an essential business practice that enables internal decision-making through activities such as budgeting and forecasting, cost analysis, internal auditing, and inventory management. It differs from financial accounting, which is more externally focused.

Step-by-step explanation:

Managerial accounting is a branch of accounting that focuses on providing information for internal use by management. This discipline involves several key activities that are crucial for running a business, and these activities include the following:

• Budgeting and forecasting: Developing detailed financial plans that project future results based on specific criteria and market conditions.
• Cost analysis: Studying and analyzing various costs to help with decision-making processes.
• Internal auditing: Auditing internal financial and control systems to ensure accuracy and compliance.
• Inventory management: Overseeing the amount of inventory kept to meet customer demand while minimizing cost.

While financial statement analysis can be related to managerial accounting when it is used for internal purposes, it is more often associated with financial accounting, which deals with the preparation of financial statements for external use by stakeholders such as investors, creditors, and tax authorities.