CA1-4
(Financial Accounting) Omar Morena has recently completed his first year of studying accounting.
His instructor for next semester has indicated that the primary focus will be the area of financial accounting.
Instructions
(a) Differentiate between financial accounting and managerial accounting.
(b) One part of financial accounting involves the preparation of financial statements. What are the
financial statements most frequently provided?
(c) What is the difference between financial statements and financial reporting?
Solution
a) Financial accounting is the process that culminates in the preparation of financial reports relative to the enterprise as a whole for use by parties both internal and external to the enterprise. In contrast, managerial accounting is the process of identification, measurement, accumulation, analysis, preparation interpretation and communication of financial information used by the management to plan, evaluate and control within an organization and to assure appropriate use of and accountability for its resources.
b) The financial statements most frequently provided are the balance sheet, the income statement, the statement of cash flows and the statement of changes in owners or stockholders equity.
c) Financial statements are the principle means through which financial information is communicated to those outside an enterprise. As indicated in b, there are four major financial statements. However, some financial information is better provided, or can provided only, by means of financial reporting other than formal financial statements. Financial reporting (other than financial statements and related notes) may take various forms. Example include the company president's letter or supplementary schedules in the corporation annual reports, prospectuses, reporting filed with government agencies, news releases, management's forecasts and descriptions of an enterprise's social or environmental impact.
(Financial Accounting) Omar Morena has recently completed his first year of studying accounting.
His instructor for next semester has indicated that the primary focus will be the area of financial accounting.
Instructions
(a) Differentiate between financial accounting and managerial accounting.
(b) One part of financial accounting involves the preparation of financial statements. What are the
financial statements most frequently provided?
(c) What is the difference between financial statements and financial reporting?
Solution
a) Financial accounting is the process that culminates in the preparation of financial reports relative to the enterprise as a whole for use by parties both internal and external to the enterprise. In contrast, managerial accounting is the process of identification, measurement, accumulation, analysis, preparation interpretation and communication of financial information used by the management to plan, evaluate and control within an organization and to assure appropriate use of and accountability for its resources.
b) The financial statements most frequently provided are the balance sheet, the income statement, the statement of cash flows and the statement of changes in owners or stockholders equity.
c) Financial statements are the principle means through which financial information is communicated to those outside an enterprise. As indicated in b, there are four major financial statements. However, some financial information is better provided, or can provided only, by means of financial reporting other than formal financial statements. Financial reporting (other than financial statements and related notes) may take various forms. Example include the company president's letter or supplementary schedules in the corporation annual reports, prospectuses, reporting filed with government agencies, news releases, management's forecasts and descriptions of an enterprise's social or environmental impact.
0 Comments