Which type of accounting is primarily concerned with tracking the maximum amount of funds that can be lent to a consumer, often referred to as a 'line of credit'?

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

Answer: (D)

Verified step by step guidance

1. Step 1: Begin by understanding the different types of accounting mentioned in the problem: Tax Accounting, Financial Accounting, Cost Accounting, and Credit Accounting. Each serves a distinct purpose in the field of accounting.
2. Step 2: Tax Accounting focuses on compliance with tax laws and regulations, ensuring accurate reporting of taxable income and deductions. It is not primarily concerned with lending or credit limits.
3. Step 3: Financial Accounting deals with the preparation of financial statements, such as balance sheets and income statements, to provide information about a company's financial performance. It does not directly address consumer credit limits.
4. Step 4: Cost Accounting is concerned with analyzing and controlling costs within a business to improve efficiency and profitability. It does not involve tracking funds for lending purposes.
5. Step 5: Credit Accounting is specifically designed to track and manage credit-related transactions, including determining the maximum amount of funds that can be lent to a consumer, often referred to as a 'line of credit.' This makes it the correct answer to the problem.