Diagnostic Test: Financial Accounting

What is the primary purpose of financial accounting?

• To prepare reports for internal management only

• To prepare reports for external users like investors and banks

• To record only cash transactions

• To track employee attendance

Which branch of accounting helps in determining the cost of production?

• Financial Accounting

• Cost Accounting

• Management Accounting

• Tax Accounting

Management accounting primarily provides information for:

• External users

• Tax authorities

• Internal decision making

• Investors

If a bakery owner wants to decide whether to increase or decrease cake prices, which accounting branch will help?

• Financial Accounting

• Management Accounting

• Cost Accounting

• Tax Accounting

Which of the following is true about bookkeeping?

• It involves analysis and interpretation of data

• It records transactions in chronological order

• It prepares financial reports for investors

• It helps in decision making

Accounting begins after bookkeeping and involves:

• Recording transactions only

• Writing transactions in a notebook

• Analysis, interpretation, and reporting

• Counting stock only

Which task belongs to bookkeeping?

• Calculating profit

• Preparing a balance sheet

• Writing down sales transactions

• Analyzing expenses

Which task belongs to accounting?

• Recording purchases date-wise

• Writing daily sales

• Preparing profit and loss reports

• Maintaining cash book

One of the main objectives of accounting is to:

• Record only cash transactions

• Determine profit or loss

• Prepare tax returns only

• Manage employee payroll only

Systematic transaction recording ensures:

• Only profits are recorded

• No transaction is missed

• Only expenses are recorded

• Only sales are recorded