Which of the following is an example of managerial accounting?

• A. Preparing a budget report for internal management use
• B. Auditing a company's financial statements for external users
• C. Recording transactions in accordance with GAAP for external reporting
• D. Filing tax returns with the IRS

Answer: (A)

Verified step by step guidance

1. Understand the distinction between managerial accounting and financial accounting. Managerial accounting focuses on providing information for internal decision-making, while financial accounting is aimed at external reporting.
2. Review the options provided in the problem. Identify which activities are related to internal management versus external reporting or compliance.
3. Option 1: Preparing a budget report for internal management use. This is a key example of managerial accounting because it involves creating reports to assist managers in planning and decision-making within the organization.
4. Option 2: Auditing a company's financial statements for external users. This is part of financial accounting, as it ensures the accuracy of financial reports for external stakeholders like investors and creditors.
5. Option 3: Recording transactions in accordance with GAAP for external reporting and Option 4: Filing tax returns with the IRS. Both are examples of financial accounting or compliance activities, not managerial accounting.