Which of the Following Best Describes Accounting

question 103

Multiple Choice

Which of the following best describes accounting?

• A) records economic data but does not communicate the data to users according to any specific rules
• B) is an information system that provides reports to users regarding economic activities and condition of a business
• C) is of no use by individuals outside of the business
• D) is used only for filling out tax returns and for financial statements for various type of governmental reporting requirements

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Definitions:

Days' Sales in Receivables

Days' Sales in Receivables is a financial metric indicating the average number of days it takes a company to collect payment after a sale has been made, used to gauge the efficiency of a company's accounts receivable management.

Note Receivable

A financial claim against another entity that promises to pay the holder a specific sum of money on a certain date or on demand.

Promissory Note

A financial document in which one party promises in writing to pay a determinate sum of money to the other, either at a fixed or determinable future time or on demand of the payee, under specific terms.

Account Receivable

Resources that a company has yet to receive payment for from customers, regarding delivered goods or services.