Which type of accounting is primarily concerned with providing information to internal users for decision-making purposes?

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

Answer: (B)

Verified step by step guidance

1. Understand the different types of accounting: Financial accounting focuses on external users like investors and creditors, while managerial accounting is designed for internal users such as managers to aid in decision-making. Tax accounting deals with compliance with tax laws, and governmental accounting is specific to public sector entities.
2. Identify the key purpose of managerial accounting: It provides detailed and relevant information to internal users, such as cost analysis, budgeting, and performance evaluation, to support operational and strategic decisions.
3. Compare the options provided in the question: Tax accounting is primarily concerned with tax compliance, governmental accounting focuses on public sector reporting, and financial accounting is aimed at external stakeholders. Managerial accounting is the only type that directly addresses internal decision-making needs.
4. Recognize that the correct answer is managerial accounting based on its focus on internal users and decision-making support.
5. Conclude that understanding the purpose of each type of accounting is essential for selecting the correct answer in such questions.