Multiple Choice
Which of the following classifications of cost items by cost behavior is correct?
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1. Introduction to Accounting
Types of Accounting
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Which of the following types of accounting focuses primarily on providing information to internal users for decision-making purposes?
A
Financial accounting
B
Governmental accounting
C
Tax accounting
D
Management accounting
Verified step by step guidance1
Understand the different types of accounting and their primary purposes. Financial accounting focuses on providing information to external users such as investors and creditors. Governmental accounting deals with the financial management and reporting of government entities. Tax accounting focuses on compliance with tax laws and regulations.
Recognize that management accounting is distinct from the other types because it is designed to provide information to internal users, such as managers, to aid in decision-making processes.
Identify the key features of management accounting, such as budgeting, forecasting, cost analysis, and performance evaluation, which are tailored to support internal decision-making.
Compare the purpose of management accounting with the other types listed in the problem. Management accounting is the only type that explicitly focuses on internal users and decision-making.
Conclude that the correct answer is management accounting, as it aligns with the description provided in the problem.
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