Multiple Choice
Which of the following best describes the primary focus of financial accounting as compared to managerial accounting?
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1. Introduction to Accounting
Types of Accounting
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Which type of accounting primarily records and reports business activities such as sales or purchases?
A
Financial accounting
B
Managerial accounting
C
Cost accounting
D
Tax accounting
Verified step by step guidance1
Understand the different types of accounting mentioned in the problem: Financial accounting, Managerial accounting, Cost accounting, and Tax accounting.
Recognize that Financial Accounting focuses on recording and reporting business activities such as sales, purchases, and other transactions to external stakeholders like investors, creditors, and regulatory agencies.
Identify that Managerial Accounting is primarily concerned with providing information to internal stakeholders (e.g., managers) for decision-making purposes, rather than external reporting.
Note that Cost Accounting deals with analyzing and controlling costs within a business, often used for budgeting and cost management, not general reporting of business activities.
Understand that Tax Accounting focuses on preparing and reporting information for tax purposes, adhering to tax laws and regulations, which is distinct from general business activity reporting.
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