Which two types of accounting are most similar in their focus on recording and reporting financial transactions for external users?

• A. Financial accounting and governmental accounting
• B. Financial accounting and management accounting
• C. Financial accounting and tax accounting
• D. Financial accounting and cost accounting

Answer: (C)

Verified step by step guidance

1. Understand the primary focus of financial accounting: It is concerned with recording, summarizing, and reporting financial transactions to external users such as investors, creditors, and regulatory agencies.
2. Review the focus of governmental accounting: It deals with the financial activities of government entities and is primarily aimed at ensuring accountability and compliance with laws and regulations, which is different from financial accounting's focus on external users.
3. Examine management accounting: It focuses on providing information to internal users (e.g., managers) for decision-making, planning, and control, which contrasts with financial accounting's external user focus.
4. Analyze tax accounting: It involves preparing and reporting financial information in compliance with tax laws and regulations, which aligns closely with financial accounting in terms of external reporting requirements.
5. Consider cost accounting: It focuses on analyzing costs for internal decision-making, which is distinct from financial accounting's external reporting purpose.