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Questions and Answers
What is the primary purpose of financial accounting?
What is the primary purpose of financial accounting?
- To support accounting functions and related activities
- To process information about economic entities
- To measure, analyze, and report information for internal use by management
- To report an organization's financial information to external users (correct)
What is the main focus of management accounting?
What is the main focus of management accounting?
- Reporting an organization's financial information to external users
- Processing information about economic entities
- Recording of financial transactions for financial reports
- Measurement, analysis, and reporting of information for internal use by management (correct)
What is the most common system used for bookkeeping?
What is the most common system used for bookkeeping?
- Single-entry bookkeeping
- Triple-entry bookkeeping
- Accrual basis bookkeeping
- Double-entry bookkeeping (correct)
Who are the stakeholders to whom accounting conveys information?
Who are the stakeholders to whom accounting conveys information?
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What are practitioners of accounting known as?
What are practitioners of accounting known as?
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Study Notes
Financial Accounting
- Primary purpose: To provide financial information to external stakeholders, such as investors, creditors, and regulatory bodies.
Management Accounting
- Main focus: To provide financial information to internal stakeholders, such as management, to aid in decision-making and internal planning.
Bookkeeping
- Most common system: Double-entry bookkeeping, which records each transaction as both a debit and a credit.
Stakeholders
- Accounting conveys information to: Investors, creditors, regulatory bodies, management, and other stakeholders who need to understand a company's financial position.
Accounting Professionals
- Practitioners of accounting are known as: Accountants.
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