Financial statements prepared for company management must adhere to which depreciation rules?

Financial statements prepared for company management do not have to use GAAP rules because these internal reports are primarily intended for management's decision-making purposes. In this context, companies have the flexibility to develop their own reporting standards and can choose to employ various methods of depreciation that reflect the best financial picture for internal use. This autonomy allows management to focus on the operational aspects of the business and provides them with relevant financial information without being constrained by external accounting standards.

While GAAP (Generally Accepted Accounting Principles) is essential for external reporting to stakeholders like investors, creditors, and regulators, internal financial management may prioritize different factors. Moreover, tax rules may not apply to internal reports, which gives management the freedom to select a depreciation method that suits their strategic goals without needing to conform to these guidelines.

In contrast, financial statements intended for external stakeholders must comply with GAAP or tax rules to ensure consistency, transparency, and comparability across organizations. Hence, the option indicating that financial statements for management do not have to adhere to GAAP rules accurately reflects this flexibility.