Description
- Why are externally presented reports required to be prepared according to generally accepted accounting principles while internally presented managerial accounting reports are not?
- How can a misstatement in one financial statement, whether intentional or not, affect a presentation in another financial statement? Give an example of an error that occurs on one financial statement and the error flows through to a second financial statement.
Explanation & Answer
Attached.
Running Head: ACCOUNTING PRINCIPLES
Accounting Principles
Name of student:
Name of professor:
Name of institution:
Submission date:
1
ACCOUNTING PRINCIPLES
2
Question one
Externally presented financial reports are reports prepared by companies to disclose their
business information to external users such as lenders, investors and the regulators to evaluate
the financial health of the company (Carpenter & Feroz, 2001). The commonly compiled
externally presented results include: the statement of financial position, the income statement
and the cash flow statement. The statement of financial position report is prepared to pronounce
the state of the company’s resources, accountabilities and owners’ equity. Besides, the income
statement report is set to pronounce the state of the company’s revenue and expenses. Finally,
the cash flow statement report is prepared to showcase how alterations in the statement of
financial position and changes in income statement affect the cash and cash equivalents. These
reports are prepared at the end of every financial year. Notably, the external reports must
portray a complete, accurate and understandable image of the company’s financial situation.
Internally presented managerial accounting reports are reports prepared strictly for the internal
users that is, the management, executive, process owners and supervisors. The Internally
presented managerial accounting reports include the sales and revenue forecasts and budget
forecasts and variance explanations. The sales and revenue forecasts are prepared to make
predictions on the volume of sales and the revenue attributed to those sales accompanied by a
variance explanation. The budget forecasts and variance explanations report, is prepared to
report the difference between the actual plans and forecasted plans, for decision making
purposes. Most notably, these reports are prepared on a weekly or monthly basis.
Generally accepted accounting principles are sets of rules used to regulate the external
financial reports of a company (Henry & Holzmann, ...
Review
Review
24/7 Homework Help
Stuck on a homework question? Our verified tutors can answer all questions, from basic math to advanced rocket science!
Similar Content
Related Tags
Girl in Translation
by Jean Kwok
The Chosen
by Chaim Potok
The Bell Jar
by Sylvia Plath
Shattered - Inside Hillary Clintons Doomed Campaign
by Amie Parnes and Jonathan Allen
The Two Towers
by J. R. R. Tolkien
The Splendid and The Vile
by Erik Larson
Macbeth
by William Shakespeare
Moby Dick
by Herman Melville
The Tipping Point
by Malcolm Gladwell