Question

Assignment Questions:

1. One of the differences between Managerial Accounting and Financial Accounting is reporting flexibility. Financial reporting is restricted by Generally Accepted Accounting Principles whereas reporting in Managerial Accounting has fewer rules.

a) Why is it permissible to violate Generally Accepted Accounting Principles when preparing reports used strictly by company management?

b) Should external users always have the same information as internal users? Explain.

2. The United States uses accounting standards developed by the Financial Accounting Standards Board (FASB) known as the generally accepted accounting principles (GAAP). This system relies on rules and regulations and thus is said to be a rules-based system. The rest of the world follows accounting standards developed by the International Accounting Standards Board (IASB) known as the international accounting financial reporting standards (IFRS). This system relies more on principles than rules. There is a movement to have one global standard, which would combine GAAP and IFRS.

a) What are the differences between GAAP and IFRS?

b) How does each standard handle research and developmentcosts?

c) What issues might arise with combining a rules-based with a principles-based system?

Course code Year JFIA 6001 2020 Course Name Semester Maximum Marks Instructor Managerial Accounting Spring 15 Marks Dr. Edmund Christopher 28th February, 2020 Assignment Due Date Assessment Submission Instructions Word or Page Limit li) Assignment should be submitted by electronically through Turnitin ii) Academic dishonesty of any kind is strictly prohibited iii) assignments should be submitted by its due date as scheduled by the Course Instructor Theory question 500 words and for Problem all steps, answer and decision. Use the following format: Introduction Detail Explanation Justify your explanation Conclusion MS Word document, Times new roman, front size 12 and 1.5 line space |(5 to 7 pages) Referencing Use APA or MLA format (minimum 5) (Instructor provides additional guidelines and directions in class) Presentation Format College Library, Internet, Newspapers, Joumals, Magazines, or other Reference Sources Accounting Concepts & Principles Resources and Support Available Scope of Assignment Task Course Learning Outcomes Assessed Course Learning Outcomes Marks 1. Demonstrate the knowledge of concepts, tools, practices and ethical issues in Management Accounting 2. Research and analyze the role of accounting information in strategy formulation and decision making

i need to answer that question

Answer 1

Answer 1(a)-- Yes it is important to follow the accounting rules as prescribed by the GAAP. But materiality is also important for an organisation. On behalf of this accounting principle, one may disregard GAAP, if the variance amount is insignificant. In this case professinal judgement is required whether or not an amount is insignificant or immaterial. Hence an accountant may be required to disregard GAAP if adherence to a particular accounting methodology actually materially distorts or abscures an entity operating results.

(b) No it is not important to provide the same information to external users as internal users have. But to follow transparency is also important to avoid any fraud activity with external users.