Which of the following is primarily concerned with the preparation and analysis of financial statements for external users such as investors and creditors?

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

Answer: (B)

Verified step by step guidance

1. Understand the purpose of each accounting type: Tax Accounting focuses on compliance with tax laws, Cost Accounting deals with cost measurement and control, Managerial Accounting aids internal decision-making, and Financial Accounting is concerned with preparing financial statements for external users.
2. Identify the key users of financial statements: External users such as investors, creditors, and regulatory agencies rely on financial statements to assess the financial health and performance of a company.
3. Recognize the primary goal of Financial Accounting: It aims to provide accurate, standardized, and transparent financial information to external stakeholders.
4. Compare the options provided in the question: Tax Accounting, Cost Accounting, and Managerial Accounting are not primarily focused on external users but rather on compliance, cost control, and internal decision-making, respectively.
5. Conclude that Financial Accounting is the correct answer because it is specifically designed to prepare and analyze financial statements for external users like investors and creditors.