Financial Account Types and Purposes

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Questions and Answers

What is the purpose of a financial account?

To track personal fitness goals
To manage a social media account
To store music playlists
To monitor and record financial transactions (correct)

Which of the following is a common type of financial account?

Credit card (correct)
Gym membership
Library card
Social security number

What does a balance sheet in a financial account show?

Favorite movie list
Net worth and assets (correct)
Weekly grocery shopping list
Travel bucket list

What are some common components of a financial account's income statement?

Common components of an income statement in a financial account include revenue, expenses, gains, and losses. Signup and view all the answers

Explain the difference between a financial account and a managerial account.

A financial account focuses on external reporting and is prepared for external stakeholders, while a managerial account is used for internal decision-making and planning. Signup and view all the answers

How does the accrual basis of accounting differ from the cash basis of accounting?

The accrual basis records revenues and expenses when they are earned or incurred, regardless of when the cash is received or paid. The cash basis records revenues and expenses only when the cash is actually received or paid. Signup and view all the answers

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