Assignment Case

Chapter #1 Questions

1. Differentiate broadly between financial accounting and managerial accounting.

When it comes to financial accounting, it is the process that culminates in the preparation of financial reports on the enterprise for use by both internal and external parties. This is done by reporting of the financial position and performance of a firm through financial statements that can help see what direction the company is going as to lose or profits. Users of these financial reports include investors, creditors, mangers, union, and government agencies. When it comes to managerial accounting, it is the process of identifying, measuring, analyzing, and communicating financial information needed by management to plan, control, and evaluate a company's operations. Managerial accounting information is aimed at helping managers within the organization make decisions.

2. Differentiate between "financial statements" and "financial reporting."

Financial statements are the principal means through which a company communicates its financial information to those outside it. These statements provide a company's history quantified in money terms. Some financial information is better provided, or can be provided only, by means of financial reporting other than formal financial statements. The other means are like the president's letter or supplementary schedules in the corporate annual report, prospectuses, reports filed with government agencies, news releases, management's forecasts, and social or environmental impact statements. Companies may need to provide such information because of authoritative pronouncement, regulatory rule, or custom. They may also do this voluntarily.

4. What is the objective of financial reporting?

The