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The main purpose of this _______ accounting is to ascertain profit or loss during a specific period, to show financial position of the business.
- a)Human resource accounting.
- b)Management account
- c)Financial accounting
- d)Cost accounting
Correct answer is option 'C'. Can you explain this answer?
Most Upvoted Answer
The main purpose of this _______ accounting is to ascertain profit or ...
Financial accounting aims at presenting 'true and fair' view of transactions, profit and loss for a period and Statement of financial position (Balance Sheet) on a given date. It aims at computing 'true and fair' view of the cost of production/services offered by the firm.
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The main purpose of this _______ accounting is to ascertain profit or ...
Understanding Financial Accounting
Financial accounting is a specialized branch of accounting that focuses on the systematic recording, summarizing, and reporting of financial transactions for a business. Its primary objectives are to ascertain profit or loss during a specific period and to provide a clear picture of the financial position of the business.
Main Features of Financial Accounting
- Profit or Loss Determination:
Financial accounting helps in assessing the profitability of a business by comparing revenues and expenses over a defined period, usually annually or quarterly. This assessment is crucial for stakeholders to understand the business's performance.
- Financial Position Representation:
It provides a snapshot of the company's financial position at a specific point in time through the balance sheet, which lists assets, liabilities, and equity. This information is vital for investors, creditors, and management to make informed decisions.
- Compliance and Standardization:
Financial accounting adheres to generally accepted accounting principles (GAAP) or International Financial Reporting Standards (IFRS). This standardization ensures consistency and comparability of financial statements across different businesses, enhancing transparency.
- External Reporting:
The primary users of financial accounting information include external parties such as investors, regulators, and creditors. The financial statements produced serve as a basis for evaluating the company's financial health and operational efficiency.
Conclusion
In summary, option 'C' - Financial Accounting, is the correct answer as it encompasses the key functions of determining profit or loss and showcasing the financial position of a business, essential for stakeholders involved in decision-making processes.
Financial accounting is a specialized branch of accounting that focuses on the systematic recording, summarizing, and reporting of financial transactions for a business. Its primary objectives are to ascertain profit or loss during a specific period and to provide a clear picture of the financial position of the business.
Main Features of Financial Accounting
- Profit or Loss Determination:
Financial accounting helps in assessing the profitability of a business by comparing revenues and expenses over a defined period, usually annually or quarterly. This assessment is crucial for stakeholders to understand the business's performance.
- Financial Position Representation:
It provides a snapshot of the company's financial position at a specific point in time through the balance sheet, which lists assets, liabilities, and equity. This information is vital for investors, creditors, and management to make informed decisions.
- Compliance and Standardization:
Financial accounting adheres to generally accepted accounting principles (GAAP) or International Financial Reporting Standards (IFRS). This standardization ensures consistency and comparability of financial statements across different businesses, enhancing transparency.
- External Reporting:
The primary users of financial accounting information include external parties such as investors, regulators, and creditors. The financial statements produced serve as a basis for evaluating the company's financial health and operational efficiency.
Conclusion
In summary, option 'C' - Financial Accounting, is the correct answer as it encompasses the key functions of determining profit or loss and showcasing the financial position of a business, essential for stakeholders involved in decision-making processes.
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