Correct Answer:
The three primary activities that are part of the function of accounting are:
- Identifying:
- Recognizing and recording financial transactions and events relevant to the business.
- Example: Identifying a sale, purchase, or loan as a transaction to be recorded.
- Recording:
- Systematically documenting financial transactions in books or software, such as journals and ledgers, ensuring accuracy and completeness.
- Example: Logging sales revenue or expenses in the accounting system.
- Communicating:
- Preparing financial statements (e.g., income statement, balance sheet) and reports to convey financial information to stakeholders.
- Example: Sharing annual reports with investors or tax authorities.
Explanation:
These activities form the core purpose of accounting: to track, organize, and present financial data for decision-making, compliance, and transparency.
