Multiple Choice
Which stage of the business life cycle is best described as the phase where a company experiences rapid growth in sales and begins to expand its operations?
19
views
1. Introduction to Accounting
Types of Accounting
Struggling with Financial Accounting?
Join thousands of students who trust us to help them ace their exams!Watch the first videoMultiple Choice
When a company sells 10,000 shares of its common stock to investors, which type of accounting is primarily responsible for recording this transaction?
A
Financial accounting
B
Tax accounting
C
Managerial accounting
D
Cost accounting
Verified step by step guidance1
Understand the nature of the transaction: The company is selling shares of its common stock to investors. This is a financial transaction that impacts the company's equity and involves external stakeholders.
Identify the purpose of the accounting type: Financial accounting is primarily concerned with recording, summarizing, and reporting financial transactions to external parties, such as investors, creditors, and regulatory agencies.
Compare the other accounting types: Tax accounting focuses on compliance with tax laws and regulations, managerial accounting is used for internal decision-making, and cost accounting deals with analyzing costs for production and operations.
Determine the relevance: Since the transaction involves external reporting (to investors), financial accounting is the appropriate type of accounting responsible for recording this transaction.
Conclude: Financial accounting is the correct answer because it ensures that the sale of shares is accurately recorded in the company's financial statements, which are shared with external stakeholders.
4:10mWatch next
Master Types of Accounting: Financial and Managerial with a bite sized video explanation from Brian
Start learningRelated Videos
Related Practice
Types of Accounting practice set
Problem sets built by lead tutorsExpert video explanations