Multiple Choice
Which type of accounting plan can a sole proprietor use only if the employees of the business are included?
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1. Introduction to Accounting
Types of Accounting
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Which type of accounting is primarily concerned with measuring and reporting a company's profitability, and helps ensure that businesses remain financially viable?
A
Financial accounting
B
Tax accounting
C
Governmental accounting
D
Cost accounting
Verified step by step guidance1
Understand the purpose of each type of accounting mentioned in the problem: Financial accounting, Tax accounting, Governmental accounting, and Cost accounting.
Recognize that Financial Accounting is primarily concerned with measuring and reporting a company's profitability and financial position to external stakeholders such as investors, creditors, and regulatory agencies.
Identify that Tax Accounting focuses on compliance with tax laws and regulations, ensuring accurate reporting of taxable income and calculation of tax liabilities.
Understand that Governmental Accounting is used by public sector entities to manage and report their financial activities, ensuring accountability and transparency in the use of public funds.
Learn that Cost Accounting is an internal process used to analyze and control costs, helping businesses make decisions to improve efficiency and profitability, but it is not primarily concerned with reporting profitability to external stakeholders.
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