Which of the following statements is incorrect? A. The practice of management accounting is fairly flexible. B. The information gathered from management accounting is not required by law. C. Management accounting focuses mainly on the internal user. D. Reports produced using management accounting must follow GAAP.

Step 1: Define the Problem

Identify which statement about management accounting is incorrect.

Step 2: Break Down the Problem

Evaluate each statement to determine its accuracy:

• A. Flexibility of management accounting
• B. Legal requirements for management accounting information
• C. Focus of management accounting
• D. Adherence to GAAP in management accounting

Step 3: Apply Relevant Concepts

• Management accounting is known for its flexibility and adaptability to meet internal needs.
• Unlike financial accounting, management accounting is not bound by legal requirements.
• It primarily serves internal users such as managers and executives.
• GAAP (Generally Accepted Accounting Principles) is a standard for financial accounting, not management accounting.

Step 4: Analysis, Verify and Summarize

• A is correct: Management accounting is flexible.
• B is correct: Information from management accounting is not legally required.
• C is correct: Management accounting focuses on internal users.
• D is incorrect: Management accounting does not need to follow GAAP.

Final Answer

D. Reports produced using management accounting must follow GAAP.