Multiple Choice
Which of the following is least likely to be kept as part of one’s financial records?
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1. Introduction to Accounting
Types of Accounting
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Which of the following is primarily concerned with the preparation and analysis of financial statements for external users such as investors and creditors?
A
Tax Accounting
B
Financial Accounting
C
Cost Accounting
D
Managerial Accounting
Verified step by step guidance1
Understand the purpose of each accounting type: Tax Accounting focuses on compliance with tax laws, Cost Accounting deals with cost measurement and control, Managerial Accounting aids internal decision-making, and Financial Accounting is concerned with preparing financial statements for external users.
Identify the key users of financial statements: External users such as investors, creditors, and regulatory agencies rely on financial statements to assess the financial health and performance of a company.
Recognize the primary goal of Financial Accounting: It aims to provide accurate, standardized, and transparent financial information to external stakeholders.
Compare the options provided in the question: Tax Accounting, Cost Accounting, and Managerial Accounting are not primarily focused on external users but rather on compliance, cost control, and internal decision-making, respectively.
Conclude that Financial Accounting is the correct answer because it is specifically designed to prepare and analyze financial statements for external users like investors and creditors.
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