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Hello, Dear tutor please help me to find correct answer. (2) is false I know, how about (1)? Is it also false coz analysing part is missing? So true answer is C?
Which of the following statements are true?
(1) Accounting can be described as the recording and summarising of transactions of
a financial nature.
(2) Companies are owned and managed by their shareholders.
A 1 only
B 2 only
C Neither 1 nor 2
D Both 1 and 2Why are you attempting a question for which you do not have an answer? You should be using a Revision Kit from one of the ACCA Approved Publishers – it has answers and explanations 🙂
(1) is true and is the standard definition of the purpose of financial accounting (as stated on the first page of the first chapter in our free lecture notes, and the lecture working through this chapter).
But Accounting is a way of recording, anlysing and summarising of financial datas as stated first chapter. How (1) is true without “analysing” part? Is it possible to summarise the datas without analysing? I didn’t understood.
I don’t know which first chapter you are referring to – I am referring to the first chapter of our free lecture notes.
We might choose to investigate data (i.e. analyse) for other purposes, but the basis of financial accounting is to record each transaction and then to summarise when producing the financial statements.
“Financial reporting is a way of recording, analysing and summarising transactions of a business”. BPP (Workbook) chapter 1, page 3.
That’s why i confused.I can understand your confusion.
However although we may well analyse information in order to speed up the process (such as using an analysed cash book – although this is now excluded from the syllabus because of the use of computers) and certainly we are likely to do some analysis for management accounting purposes, it is not part of the definition of financial accounting.
Financial accounting is, by definition, the recording of transactions and the summarising of them for the preparation of the financial statements.
I do suggest that you watch my free lectures. They are a complete free course for Paper FA and cover everything needed to be able to pass the exam well.
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