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Accounting Ethics Article Review

793 words - 3 pages

The article that I chose discussed the differences between financial and managerial accounting, as well as what they do. The article covered the rules and regulations of theses two types of accounting based on the GAAP that were established by the FASB.Financial accounting involves the preparation of a business's financial statements, mainly for users outside the business. Owners, and potential owners of a business use the reports generated. The people who have loaned the company money may also use them. Some government agencies that regulate business and the stock market require companies to submit financial statements to them.Financial accounting, it is limited by a widely accepted set of rules, standards, and procedures for reporting financial information known as the generally accepted accounting principles (GAAP), as established by the Financial Accounting Standards Board (FASB). This standard requires that a company "account for all of their assets or economic resources according to their historical costManagerial accounting helps managers plan and control a company's operations. Accountants prepare budgets to express management's goals in financial terms by identifying, measuring, accumulating, analyzing, interpreting, and communicating information. Cost accountants help management keep track of how much it is costing the company to make the product, or provide the service, it sells.Managerial accounting does not have the same requirements concerning the execution of the rules and procedures of the GAAP. Management of an organization can create any type of internal accounting system that will work best for their company. They also need to take into account the information that needs to be kept. More than one set of records is usually the norm.Although different in many ways both financial and managerial accounting must adhere to the Foreign Corrupt Practices Act. This act is a "U.S. law forbidding bribery and other corrupt practices, and requiring that accounting records be maintained in reasonable detail and accuracy, and that an appropriate system of internal accounting be maintained." (Horngreen, Stratton, & Sundem, p. 7)Reporting RequirementsFinancial accounting usually utilizes summary reports that are concerned primarily with the company as a whole. Managerial accounting uses more detailed reports, which itemize parts of the company such as products, departments, and territories. The use of performance reports is an important...

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