What is the primary purpose of financial accounting?
A)Determine the amount of tax liability owed to the government.
B)Communicate business activities to internal management.
C)Measure business activities and communicate those measures to external users to make decisions.

Question

Quizplus · Accepted Answer

The primary purpose of financial accounting is to measure business activities and communicate those measures to external users to make decisions, such as investors, creditors, and regulatory agencies. Financial accounting provides information about a company's financial position, performance, and cash flows, which can assist external users in making investment, credit, and other economic decisions. The determination of tax liability is a secondary purpose of financial accounting, and internal management uses management accounting, not financial accounting, to analyze and make decisions about business activities.

What Is the Primary Purpose of Financial Accounting