CIMA BA3 · Chapter 1 · Question 1 of 10
Which of the following best describes the main purpose of financial accounting, as distinct from management accounting?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: A) To record transactions and report the financial performance and position of an entity, mainly for external users
Explanation
Financial accounting records an entity's transactions and summarises them in financial statements that report its performance and position, mainly for external users such as investors and lenders. Budgets, standard costing, variance analysis and product costing are management accounting tools prepared for internal decision-making.
More The accounting framework and the Conceptual Framework MCQs
- Q3Which group does the Conceptual Framework identify as the primary users of general purpose financial reports?
- Q4Under the IASB Conceptual Framework, an asset is defined as:
- Q5Under the IASB Conceptual Framework, which of the following is the definition of a liability?
- Q6Which of the following is NOT one of the elements of financial statements identified in the IASB Conceptual Framework?
- Q7Which body is responsible for developing and issuing IFRS Accounting Standards?