Q1TI_1 - Horngren'S Financial And Managerial Accounting

Question

Identify the following characteristics as primarily related to financial accounting (FA) or managerial accounting (MA): 1. Helps creditors make lending decisions

Step-by-Step Solution

Answer

The creditors are the party to whom the business owes money and the correct answer to this question is financial accounting.

Step 1: Definition of Creditors

The creditors are defined as the individual or business to whom the companies owe some amount of money.

Step 2: Identification of accounting type

The correct option is financial accounting

The appropriate accounting will be financial accounting as creditors require information about the company’s financial health and financial position. As this information will help the creditors to make lending decisions. All this information is provided in the financial statements which are prepared in the financial accounting.