• Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

Financial accounting

Extracts from this document...


ABSTRACT The primary role of accounting information is to provide information for decision-making purposes. Both financial and managerial accounting rely on the same basic accounting database. However, there are important differences between the two disciplines. Neither financial nor managerial accounting is a subset of the other. They each have a distinct purpose and audience. Financial accounting is defined as measuring and recording business transactions and providing financial statements that are based on generally accepted accounting principles (Matteson, 2004). Financial accounting is concerned with external reports to owners, creditors, and shareholders. One objective of financial accounting is to provide information that is useful in making investment and credit decisions; in assessing the amount, timing, and uncertainty of future cash flows; and in learning about the enterprise's economic resources, claims to resources, and changes in claims to resources. The object of financial accounting is to assist accountants in their stewardship function: the safeguarding of the organization's assets. The central outputs of financial accounting are auditing financial statements such as balance sheets and income statements. ...read more.


Some students tend to equate legal and ethical behavior. That is, if an action is legal, they consider it to be ethical. Ethical standards are necessary for the smooth functioning of an advanced market economy. One advantage of approaching ethical issues in the management accounting and financial management is that there is a code of ethics by a professional body (the Institute of Management Accountants) that can be used as a framework. According to the IMA website, individuals in both management and financial management face constant ethical dilemmas (2005) Ethics deals with human conduct in relationship to moral rights and wrongs. Managers must predict the outcome of a situation or decision and take responsibility for the results. This is true in most areas of company management. IMA members have set criteria for analyzing and reporting any ethical issues and misconducts from managers, companies and employers. To help management in assessing these situations, the Institute of Management Accountants has developed the following five "Standards of Ethical Conduct for Practitioners of Management Accounting and Financial Management." ...read more.


* If the ethical conflict still exits after exhausting all levels of internal review, there may be no other recourse on significant matters than to resign from the organization and to submit an informative memorandum to an appropriate representative of the organization. Often there is a perception that unethical behavior is normal in the business community. A solid ethics program can be very useful in defending a company and individuals against criminal penalties. Good ethics is also simply sound business. Too often, business ethics is portrayed as a matter of resolving conflicts in which one option appears to be the clear choice. However, ethical dilemmas faced by managers are often more real-to-life and highly complex with no clear guidelines, whether in law or often in religion. Ethical conflict exists when there is a presence of a) significant value conflicts among differing interests, b) real alternatives that are equality justifiable, and c) significant consequences on "stakeholders" in the situation (Wallin, 2004). An ethical dilemma exists when one is faced with having to make a choice among these alternatives. ...read more.

The above preview is unformatted text

This student written piece of work is one of many that can be found in our GCSE Accounting & Finance section.

Found what you're looking for?

  • Start learning 29% faster today
  • 150,000+ documents available
  • Just £6.99 a month

Not the one? Search for your essay title...
  • Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

See related essaysSee related essays

Related GCSE Accounting & Finance essays

  1. Complete Report on Askari Commercial Bank

    The bank as cancellation charges Rs. 100. The bank officer verifies the signature of applicant. Cancellation of DD is recorded in DD issue register. The bank first sends IBCA to the beneficiary bank and then cancellation application. The beneficiary bank first credits to customer account and then debit it by

  2. International Accounting Standarts

    Active accruals are set up for future payments that are going to be calculated for the former balancing period in order to hold the principle of allocation of expenses unrelated to accounting period. However, they are no assets, since they cannot be divested individually.

  1. Harmonisation of accounting standards in Europe

    It can however recommend and suggest possible amendments to them. Since the IASB is interested in issuing standards worldwide it can be argued that it is more difficult for them to develop standards that suit the different countries and that the "implementation is a relatively slow process"11.

  2. The Purpose of Keeping Accurate Accounts

    the power to apply to the court for revision of the accounts were non compliance is justified. This means that the companies' standards have the force of law whereas previously they had no law stature. Company Law Limited companies are required by law (the Company Act 1985)

  1. This report has been produced as evidence for Unit 9 - 'Financial Services' - ...

    Some of these accounts also offer full banking facilities such as cheque books, cheque guarantee and credit cards. But in return for that flexibility savers can expect to get a lower rate on interest on their money. In late 2002, instant access accounts offered between 2% and 4% AER -

  2. Unit 5 Introduction to Accounting

    In bad years, dividends may be nothing whereas in good years they may be substantial. Some businesses may choose to pay out a dividend even if it has had a difficult trading year and has made a loss. Ordinary shareholders can vote on all of the issues raised at a

  1. Investigating financial control for a new restaurant.

    also increase. At low levels of output, Costs are greater than Income. At the point of intersection, P, costs are exactly equal to income, and hence neither profit nor loss is made. A break even chart is where sales revenue, variable costs, and fixed costs are plotted on the vertical axis while volume is plotted on the horizontal axis.

  2. What does Finance involve.

    Some of the websites were unsuitable because the prices of the products were to expensive or they were overseas. Also I rejected some companies and went for the once I have chosen above because they did not sell specific products that would be suitable for my shop so there was

  • Over 160,000 pieces
    of student written work
  • Annotated by
    experienced teachers
  • Ideas and feedback to
    improve your own work