Question

Which of the following involves the preparation of reports and statements from the classified data (ledger) understandable and useful to management and other interested parties?

• A. Classifying
• B. Recording
• C. Summarizing
• D. All of the above

Answer 1

Answer: (C)

Summarizing

Summarizing involves the preparation and presentation of reports and statements from the classified data (ledger) to make it understandable and useful to management and other interested parties.
The data is summarized to help users of financial statements to make meaningful and informed decisions.
There are mainly two types of users of financial statements.
1. Internal Users. example- owner

2. External Users. example- shareholder.