Which of the following types of accounting is NOT typically required by lenders and investors?

• A. External reporting
• B. Managerial accounting
• C. Audited financial statements
• D. Financial accounting

Answer: (B)

Verified step by step guidance

1. Understand the context of the question: Lenders and investors typically require accounting information that helps them assess the financial health and performance of a company. This includes external reporting, audited financial statements, and financial accounting.
2. Clarify the purpose of each type of accounting mentioned: External reporting involves providing financial information to external stakeholders, audited financial statements ensure the accuracy and reliability of financial data, and financial accounting focuses on preparing financial statements for external use.
3. Explain managerial accounting: Managerial accounting is primarily used for internal decision-making within the company. It provides information to managers to help them plan, control, and make decisions, but it is not typically required by external parties like lenders and investors.
4. Compare the requirements of lenders and investors: Lenders and investors rely on external reporting, audited financial statements, and financial accounting to make informed decisions about providing loans or investing in a company. Managerial accounting does not serve this purpose.
5. Conclude that managerial accounting is the type of accounting NOT typically required by lenders and investors, as it is designed for internal use rather than external reporting.