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Part 1: (Theory)
Brave Brands Marketing is a well-renowned marketing organization with a strong workforce of dedicated employees. However, the CEO has recently identified that many of his staff members have a poor understanding of financial statements and difficulty in interpreting financial data as their tertiary education has not exposed them to such information. (Brian ,2008) As an ADSM graduate, you have been asked to do research which will enable you to answer the following questions in preparation for the training course that you will perform internally for the company.
Question1: In a brief but comprehensive response, define the role of accounting. (You are required, amongst others, to address accounting information, users of financial information, the accounting process and the role of financial accounting vs. management accounting.)
The role of accounting can contribute to the corporate governance process by acting as a control process and by providing economic information relevant to evaluating the effectiveness of corporate controls. (White,2004)
Financial Accounting: Financial accounting is used to present the financial health of an organization to its external stakeholders. Board of directors, stockholders, financial institutions and other investors are the audience for financial accounting reports. Financial accounting presents a specific period in the past and enables the audience to see how the company has performed. Financial accounting reports must be filed on an annual basis, and for publically traded companies, the annual report must be made part of the public record. (Brian ,2008)
Management Accounting: managers to make decisions concerning the day-to-day operations of a business use Management or managerial accounting. It is based not on past performance, but on current and future trends, which does not allow for exact numbers. Because managers often have to make operation decisions in a short period of time in a fluctuating
Brave Brands Marketing is a well-renowned marketing organization with a strong workforce of dedicated employees. However, the CEO has recently identified that many of his staff members have a poor understanding of financial statements and difficulty in interpreting financial data as their tertiary education has not exposed them to such information. (Brian ,2008) As an ADSM graduate, you have been asked to do research which will enable you to answer the following questions in preparation for the training course that you will perform internally for the company.
Question1: In a brief but comprehensive response, define the role of accounting. (You are required, amongst others, to address accounting information, users of financial information, the accounting process and the role of financial accounting vs. management accounting.)
The role of accounting can contribute to the corporate governance process by acting as a control process and by providing economic information relevant to evaluating the effectiveness of corporate controls. (White,2004)
Financial Accounting: Financial accounting is used to present the financial health of an organization to its external stakeholders. Board of directors, stockholders, financial institutions and other investors are the audience for financial accounting reports. Financial accounting presents a specific period in the past and enables the audience to see how the company has performed. Financial accounting reports must be filed on an annual basis, and for publically traded companies, the annual report must be made part of the public record. (Brian ,2008)
Management Accounting: managers to make decisions concerning the day-to-day operations of a business use Management or managerial accounting. It is based not on past performance, but on current and future trends, which does not allow for exact numbers. Because managers often have to make operation decisions in a short period of time in a fluctuating
References: Brian Ballou and Dan L. Heitger.(2008).Kofenya: The Role of Accounting Information in Managing the Risks of a New Business. Pages 211–228 White, L. (2004). Management accountants and enterprise risk management. Strategic Finance (November): pages 6–7. Vol. 23, No. 2 David J. Cooper, Jeff Everett.(2005). Financial Scandals, Accounting Change and the Role of Accounting Academics. North America. Vol. 14, No. 2, 373–382, 2005. Aurelian Virgil.(2009).The Role of Accounting and Accounting Law in Establishing Public Economic Policies in the Post-crisis Period. No. 6(571), pp.111-120. Lucrari Stiintifice.(1999). Income statement – limits and informational valance. Seria I, Vol. Xii (3) Alan J. Richardson. (2008). Organizational Founding, Strategic Renewal, and the Role of Accounting: Management Accounting Concepts in the Formation of the ‘‘Penny Post’’. York University. Pages: 107–127 Kate M.Sheehy.(1999). An introduction to Accounting.