Which of the following are true about accounting:

Which of the following are true about accounting:

a. Accounting is a system of record keeping

b. Accounting focuses on cash flow

c. Accounting emphasizes financial theory

d. Both a & b

Answer: d. Both a & b

Accounting will therefore conform to this definition that perhaps defines it better as statement ‘a’ which is a system of record keeping since it encompasses the systematic recording, classifying and summarizing of financial transactions in order to generate information about a particular entity’s financial status. This aspect of record-keeping is the very core of accounting since it is tasked with keeping records of all financial activities.

Further, accounting involves preparing records of financial transactions, whereas cash flow refers to statement b, which is an aspect of accounting that indicates a business entity’s ability to generate cash from operations, investment and financing activities. Cash flow statements are one of the primary financial statements specialising in operational cash receipts as well as payments alongside investment and financing.

Statement c is incorrect because accounting is a realistic approach that deals with the annual or period presentation and does not focus on theory.