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Free response · 3.3 Accounting and Financial Management
Exam-style concept-application task: apply the topic to a new business scenario. Suggested time 12–13 minutes.
FRQ 3 — Concept application (3 points)
Ridgeline Outfitters is a 12-store outdoor-gear retailer with an accounting department of six people and a finance department of three. Last quarter, store managers received monthly reports on each store's sales, labor cost, and shrinkage (inventory loss). Separately, the company published its quarterly results to its lenders and shareholders. The finance team then recommended closing one underperforming store and shifting its inventory to the online channel.
(A) Identify which type of accountant prepared the monthly store reports, and explain how the intended audience determines that classification. 1 pt
(B) Explain how the quarterly results published to lenders and shareholders differ in purpose from the monthly store reports. 1 pt
(C) Explain why the recommendation to close a store came from the finance department rather than the accounting department, and identify ONE type of data the finance team would have needed from accounting to make it. 1 pt