Multiple Choice
Which of the following is NOT one of the three primary types of responsibility centers in accounting?
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1. Introduction to Accounting
Types of Accounting
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Debt revolves around which of the following types of accounting?
A
Managerial accounting
B
Financial accounting
C
Cost accounting
D
Tax accounting
Verified step by step guidance1
Understand the context of the question: Debt is a financial obligation that a company owes to external parties, such as loans or bonds. It is recorded and reported in the financial statements.
Identify the types of accounting mentioned: Managerial accounting focuses on internal decision-making, cost accounting deals with cost analysis, tax accounting focuses on tax compliance, and financial accounting involves preparing financial statements for external users.
Recognize that financial accounting is concerned with the accurate recording, summarizing, and reporting of financial transactions, including debt, to external stakeholders such as investors, creditors, and regulators.
Eliminate the other options: Managerial accounting, cost accounting, and tax accounting are not primarily focused on external reporting of debt. They serve different purposes within the organization.
Conclude that the correct answer is financial accounting, as it is the branch of accounting that deals with the reporting of debt and other financial information to external users.
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