The Preparation of Financial Statements for People Outside the Firm

question 127

Multiple Choice

The preparation of financial statements for people outside the firm (creditors, unions, suppliers, and others) is the goal of

• A) auditing.
• B) financial accounting.
• C) managerial accounting.
• D) cost accounting.

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Definitions:

Accumulated Depreciation

The total amount of depreciation that has been recorded for an asset since it was put into use, reducing its book value on the balance sheet.

Trade-in Allowance

The amount credited to the buyer by the seller for a traded-in asset toward the purchase of a new asset.

Cost Basis

The original value or purchase price of an asset or investment, used to calculate capital gains or losses for tax purposes.

Accumulated Depreciation

The total depreciation costs applied to a fixed asset from the time of its acquisition.