Financial accounting and managerial accounting deal with the preparation of accounting reports that provide information for decision making. Financial accounting deals with the preparation of financial statements such as the balance sheets and the profit and loss accounts. These are disclosed to both internal and external users. The internal users include the management and employees. Management accounting deals with the preparation of accounts that are used internally by management for decision making. Financial accounting statements are subject to the scrutiny of outsiders; potential investors, financial institutions and economic analysts compared to managerial accounts that are used internally by management (Ramanna & Sletten, 2009). Financial accounts provide information on the financial position and position of the business whereas management accounts provide information for planning, budgets and controls for management decision making. This explains why financial accounts need to follow certain standards compared to managerial accounts. Due to globalization, countries need to speak the same language internationally so that the accounts produced can be understood and improve investor confidence regardless of the country concerned. This paper sets out to explain what IFRS is, the arguments for and against using uniform accounting standards in the preparation of financial statements and the flexibility of the preparation of management accounting reports (Caroline, 2010). History of International Financial Reporting Standards The International Accounting Standards Board (IASB) was formed to promote the adoption of the IFRS so that there is worldwide consistency in financial reporting regardless of where the organization was located. The International Accounting Standards Committee (IASC) was formed in 1973 to prepare standards that would be used by smaller nations in creating their own internal accounting standards. This was succeeded by the IASB in 2001. GAAP is an appropriate tool for financial reporting where organizations operate within a country’s borders with reason. With globalization a company may find it difficult to compare its financial statements using its GAAP without violating the GAAP of another. IFRS were developed due to the growth of global markets and the desire by multinationals and organizations to have one common set of financial statements that can be understood internationally. The IASB was mandated to develop high quality accounting standards that would reduce the cost of doing business, increase efficiency and provide information for potential investors. Currently, there are over 100 countries that have adopted the IFRS. There are many countries that are in the process of replacing the local standards with IFRS such as the US (Armstrong, Barth, Jagolinzer, & Riedl, 2010). Benefits of International Financial Reporting Standards There is greater comparability of financial statements. Companies from different countries can easily compare their accounts. Using different rules in the preparation would not be possible and good for investment. The statements can be compared in all the financial markets irrelevant of where they were prepared. Financial statements prepared using IFRS are more flexible as they are principle based compared to local accounting stan
Benefits and Drawbacks of International Financial Reporting Standards Name: Instructor: Course: Date: Benefits and Drawbacks of International Financial Reporting Standards Introduction International Financial Reporting Standards (IFRC) are accounting standards that are used by organizations to determine how a business’s transactions are reported and disclosed…
ess). Though option D is also the correct answer but manufacturing accounts include direct as well as indirect manufacturing costs incurred during the year and these costs are further summed up together and transferred to the trading account. Hence it can easily be said that manufacturing accounts serves to calculate the costs of finished goods produced in a manufacturing business.
Question 1 By upholding ethics in their auditing exercise, I think independent certified public accountants can maintain an independent audit engagement even if their fees are paid by the entity. By adopting the aspect of objectivity, that excludes prejudice, compromise and bias, auditors gives fair view of the company financial position.
The statement given above is true and can be found under 2-607(3) (a). The statement makes three vital points. The first point is that it defines a time period in which the buyer could give notice if there is any defect in the material bought. The time period usually varies depending on the circumstances of the given situation (Warner Norcross and Judd). The second point that the statement makes that the buyer must notify the seller of the defect within the merchandise (Warner Norcross and Judd).
It is important to note that the time revenue is recognized has an effect on the financial statement of the period. According to the International Accounting Standard 18, revenue should be recognized when earned or when it becomes realisable (ACCA, Para. 9).
Revenue recognition Revenue is “the gross inflow of economic benefits during the period arising in the course of the ordinary activities of an entity when those inflows result in increases in equity, other than increases relating to contributions from equity participants.” An income can be described as a gross inflow of financial benefits, less cost of sales or /and other expenditures such as operating costs and tax liabilities.
The executive management team might pay off the internal auditor to hide fraudulent activities. Internal controls, management oversight, and management self-assessment are some of the techniques that can be used to prevent frauds
When business became more complex, then double-entry accounting was implemented; firstly, to avoid mistakes in the monies, but, also, to detect and prevent any fraudulent activity that may be occurring. Today there is far more elements within business
Contributions made are treated as expenses while those received are treated as income for the organization.
SFAS 116 describes the approach used for allotting of contributions some of which imposes conditions to the beneficiaries (McCarthy et al., 2012). There are
1 pages (250 words)Assignment
Hire a pro to write a paper under your requirements!
Win a special DISCOUNT!
Put in your e-mail and click the button with your lucky finger
Apply my DISCOUNT
Got a tricky question? Receive an answer from students like you!Try us!
Let us find you another Assignment on topic It is necessary for large listed companies in different countries to prepare financial statements using uniform accounting stand for FREE!