Question

Identify the importance of accounting by selecting the statement that is correct below. Multiple choice question. Accounting information helps users make business and financial decisions. Accounting is a system that identifies, records and communicates an organization's business activities. Accounting information is primarily used only at the end of a year when tax returns and financial statements are prepared.

Answer 1

Answer:

Accounting information helps users make business and financial decisions.

Explanation:

Users of accounting information are divided into :

1. Internal users
2. External users

Internal users include : owners, managers, employees

External users include : shareholders, tax authority, regulatory bodies

Based on the information contained in the financial information a shareholder can decide if to invest in a company or not to.

Also, mangers can decide to invest in new ventures based on the information on profitability contained in the financial statements.