Which type of accounting primarily focuses on providing information to external parties such as suppliers, investors, and creditors?

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

Answer: (A)

Verified step by step guidance

1. Understand the purpose of each type of accounting mentioned in the problem. Financial Accounting focuses on providing information to external parties, while Managerial Accounting is for internal decision-making, Tax Accounting deals with tax compliance, and Cost Accounting focuses on cost management.
2. Identify the key stakeholders mentioned in the problem: suppliers, investors, and creditors. These are external parties who rely on accurate and standardized financial information.
3. Recognize that Financial Accounting is designed to meet the needs of external parties by preparing financial statements such as the balance sheet, income statement, and cash flow statement.
4. Note that Financial Accounting adheres to standardized principles like Generally Accepted Accounting Principles (GAAP) or International Financial Reporting Standards (IFRS) to ensure consistency and comparability for external users.
5. Conclude that the correct type of accounting that primarily focuses on providing information to external parties is Financial Accounting.