Financial accountants would prepare which of the following reports? a. Control report comparing direct material usage over time b. Performance report identifying amounts of scrap c. Sales report targeting monthly sales and potential bonuses d. Annual report for external regulators such as the SEC
Answer (1)
Financial accounting is primarily concerned with keeping accurate records and preparing reports for external stakeholders, including investors, creditors, and regulatory agencies. The reports prepared by financial accountants are intended to provide a comprehensive overview of the financial health and performance of a company.
Among the options provided:
Control report comparing direct material usage over time - This type of report is used in management accounting rather than financial accounting. Management accounting focuses on internal processes to help managers make decisions, which involves more detailed internal information tracking, like direct material usage.
Performance report identifying amounts of scrap - Similar to the first option, this report pertains to management accounting. It is used internally to evaluate efficiencies and wastage in processes.
Sales report targeting monthly sales and potential bonuses - This report tends to be part of management accounting or internal reporting rather than financial accounting because it focuses on sales performance and internal bonuses strategies.
Annual report for external regulators such as the SEC - This is the report prepared by financial accountants. The annual report generally includes the financial statements, management discussion and analysis, and other disclosures required by regulatory bodies like the Securities and Exchange Commission (SEC). It is intended for external users such as investors, creditors, and regulators.
Given these descriptions, the correct answer is d. Annual report for external regulators such as the SEC . This aligns with the primary purpose of financial accounting to provide information to external stakeholders.
