Which of the following best describes the purpose of an accounting system?
A)To accumulate data.
B)To determine the amount of taxes owing.
C)To determine the market value of an entity.
D)To organize, process and convert data into useful information.

Question

Quizplus · Accepted Answer

An accounting system is used to organize, process, and convert financial data into useful information that can be used to make informed decisions. While it may help with tax calculations and determining the financial worth of an entity, its primary purpose is to provide accurate and meaningful financial information to users. Choice A is partially correct, as accumulation of data is necessary, but it is not the sole purpose. Choice C is also incorrect, as determining market value is not the primary purpose of an accounting system.

Which of the Following Best Describes the Purpose of an Accounting