Which one of the following is the system that identifies, records, summarises and communicates the various transactions of a business entity?

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BlackTom AI · Accepted Answer

The question asks which option corresponds to the system that identifies, records, summarises and communicates the various transactions of a business entity.
Option 1: 'Transaction' refers to a single business event that affects financial statements, not to a system that handles processing of transactions. It describes what is being processed, not the processing system itself.
Option 2: 'Accounting information system' is the correct description, as an AIS encompasses the identification, recording, summarising, and communication of financial transactions within a business. It integrates people, processes, and technology to produce useful financial information for decision making.
Option 3: 'Account' is a basic ledger tool that records increases and decreases in a specific element of financial position (like cash or revenue), but it is not the overarching system that processes all transactions.
Option 4: 'Qualitative characteristics' refer to the attributes that make financial information useful (such as relevance and faithful representation), not to the system that processes transactions. These characteristics describe the quality of information, not the processing framework.
Overall, the AIS is the comprehensive framework that performs the activities described in the question, whereas the other options refer to components or concepts related to accounting but do not describe the processing system itself.

4510_ACCTING_1002 Module 3.1

Which one of the following is the system that identifies, records, summarises and communicates the various transactions of a business entity?

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