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Definitions about financial standards and reporting

Please answer the following questions about financial accounting

1. Differentiate broadly between financial accounting and managerial accounting.

2. Differentiate between financial statements and financial reporting.

3. What are the major objectives of financial reporting?

4. What is the likely limitation of 'general-purpose financial statements'?

5. If you had to explain or define 'generally accepted accounting principles or standards', what essential characteristics would you include in your explanation?

Solution Preview

1. Financial accounting produces financial reports for the entity as a whole. They are used inside the company and outside to stakeholders such as investors, creditors, unions and governmental agencies. Managerial accounting is a tool used to analyze, measure and communicate certain financial information needed by management to evaluate and control operations.

2. Financial statements comprise the package of data ...

Solution Summary

The solution discusses definitions and differences between financial accounting, managerial accounting, financial reporting and 'generally accepted accounting principles or standards'