Multiple Choice
Which of the following terms refers to the grant of authority by a shareholder to someone else to vote his or her shares?
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1. Introduction to Accounting
Types of Accounting
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Auditors from the Internal Revenue Service (IRS) sent to review a company’s tax records are primarily engaged in which type of accounting?
A
Cost accounting
B
Financial accounting
C
Tax accounting
D
Managerial accounting
Verified step by step guidance1
Understand the context of the question: The IRS auditors are reviewing a company's tax records, which are directly related to compliance with tax laws and regulations.
Recognize the different types of accounting mentioned in the problem: Cost accounting focuses on analyzing costs for production and operations, Financial accounting deals with preparing financial statements for external users, Managerial accounting is used for internal decision-making, and Tax accounting focuses on tax compliance and reporting.
Identify the primary purpose of IRS auditors: Their role is to ensure that the company complies with tax laws, accurately reports taxable income, and pays the correct amount of taxes.
Match the purpose of IRS auditors with the type of accounting: Tax accounting is specifically concerned with preparing and reviewing tax-related records, which aligns with the IRS auditors' activities.
Conclude that the correct type of accounting for this scenario is Tax accounting, as it directly addresses the review of tax records by IRS auditors.
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