Multiple Choice
Clark’s Cleaners is a housekeeping service. The company’s expenses include the cost of cleaning supplies, wages for employees, and utility bills. These expenses are best classified as:
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1. Introduction to Accounting
Types of Accounting
Multiple Choice
Which type of accounting system reports on various segments or business units of a company?
A
Financial accounting
B
Tax accounting
C
Auditing
D
Managerial accounting
Verified step by step guidance1
Understand the purpose of each type of accounting system mentioned in the problem: Financial accounting focuses on external reporting to stakeholders, Tax accounting deals with compliance with tax laws, Auditing ensures accuracy and compliance of financial records, and Managerial accounting provides internal reports for decision-making.
Recognize that the question is asking about reporting on various segments or business units within a company, which is typically an internal function.
Recall that Managerial accounting is designed to provide detailed reports and analysis for internal use, such as performance evaluation of different departments or business units.
Differentiate Managerial accounting from Financial accounting, which provides aggregated financial statements for external users, and Tax accounting, which focuses on tax compliance rather than internal reporting.
Conclude that Managerial accounting is the correct type of accounting system for reporting on various segments or business units of a company, as it supports internal decision-making and operational efficiency.
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