Buying a house while self-employed can put your financial stability at risk. Which type of accounting is most relevant for tracking personal income and expenses in this scenario?

• A. Managerial Accounting
• B. Cost Accounting
• C. Financial Accounting
• D. Personal Accounting

Answer: (D)

Verified step by step guidance

1. Understand the context of the problem: The scenario involves tracking personal income and expenses while self-employed, which is related to individual financial management rather than business operations.
2. Review the definitions of the accounting types provided: Managerial Accounting focuses on internal decision-making for businesses, Cost Accounting deals with analyzing costs for production, and Financial Accounting involves preparing financial statements for external stakeholders.
3. Recognize that none of the listed accounting types (Managerial, Cost, or Financial Accounting) directly address personal income and expenses. Instead, Personal Accounting is the most relevant for managing individual finances.
4. Clarify that Personal Accounting involves tracking personal income, expenses, assets, and liabilities to ensure financial stability and informed decision-making.
5. Conclude that the correct answer is Personal Accounting, as it aligns with the need to manage personal financial stability while self-employed.