CA Foundation · Accounting · Theoretical Framework
Which of the following best describes the primary purpose of accounting as defined at the Foundation level?
Accounting is the process of identifying, measuring, recording and communicating economic information so that users can make informed judgements and decisions. Tax returns, fraud detection and forecasting are only by-products or separate functions, not the core meaning of accounting.
- AIdentifying, measuring, recording and communicating economic information to enable informed judgements and decisions by usersCorrect
- BPreparing only the tax returns of a business for the assessing authority
- CDetecting and preventing all frauds committed within an organisation
- DForecasting the future profits of a business using statistical methods
Explanation
Accounting is the process of identifying, measuring, recording and communicating financial information so users can make informed decisions. Tax filing is only one use of the information, and fraud detection is the role of auditing. Forecasting is not the defining function of accounting.
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