The accounting department of a manufacturing company is an example of which type of accounting?

• A. Governmental accounting
• B. Tax accounting
• C. Managerial accounting
• D. Financial accounting

Answer: (C)

Verified step by step guidance

1. Understand the different types of accounting: Governmental accounting deals with public sector entities, Tax accounting focuses on compliance with tax laws, Managerial accounting is used for internal decision-making, and Financial accounting involves preparing financial statements for external stakeholders.
2. Identify the context of the problem: The accounting department of a manufacturing company is primarily concerned with internal operations, such as budgeting, cost analysis, and performance evaluation.
3. Recognize that Managerial accounting is designed to provide information to managers within the organization to aid in decision-making, which aligns with the activities of the accounting department in a manufacturing company.
4. Compare Managerial accounting with Financial accounting: Financial accounting focuses on external reporting, such as preparing financial statements for investors and creditors, whereas Managerial accounting is internally focused.
5. Conclude that the correct type of accounting for the accounting department of a manufacturing company is Managerial accounting, as it supports internal management processes and decision-making.