Multiple Choice
Which of the following is a primary advantage of using multiple department factory overhead rates instead of a single plantwide factory overhead rate?
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1. Introduction to Accounting
Types of Accounting
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Which type of accounting is primarily concerned with the recording and reporting of a company's financial transactions for external users such as investors, creditors, and regulators?
A
Managerial Accounting
B
Cost Accounting
C
Tax Accounting
D
Financial Accounting
Verified step by step guidance1
Understand the purpose of Financial Accounting: It is primarily concerned with recording, summarizing, and reporting a company's financial transactions to external users such as investors, creditors, and regulators.
Differentiate Financial Accounting from Managerial Accounting: Managerial Accounting focuses on providing information for internal decision-making, while Financial Accounting is aimed at external stakeholders.
Compare Financial Accounting with Cost Accounting: Cost Accounting deals with analyzing and controlling costs within the company, whereas Financial Accounting focuses on the overall financial performance and position of the company.
Contrast Financial Accounting with Tax Accounting: Tax Accounting is specialized in preparing tax returns and ensuring compliance with tax laws, while Financial Accounting provides a broader view of the company's financial health for external reporting.
Conclude that Financial Accounting is the correct answer because it aligns with the goal of providing financial information to external users such as investors, creditors, and regulators.
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