...CHAPTER 1 The Accounting Environment: What Is Accounting and Why Is It Done? QUESTIONS Q1-1. A variety of answers are possible but the essential elements are the production and communication of information so that stakeholders can make decisions. Q1-2. Financial accounting is concerned with providing information to those outside an entity such as investors, lenders, and CRA. Managerial accounting provides information to those inside the entity such as managers and other decision makers. Table 1.3 provides differences: Table 1.3 DIFFERENCES BETWEEN FINANCIAL AND MANAGERIAL ACCOUNTING | |Financial Accounting |Managerial Accounting | |Stakeholders |External to the entity. Includes investors, |Internal to the entity. Managers and other | | |lenders, taxation authorities (such as the |employees. | | |Canada Revenue Agency), competitors, and many | | | |others. These stakeholders usually don’t have | | | |direct access to information about the entity | | | ...
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...Introduction: The basic purpose of accounting is to prepare financial information for internal and external users. Accounting standards play a key role in financial reporting and help users to make informed decisions. Levitt (1998) highlighted the importance of accounting standards as ‘educated investors need relevant, useful information to make their investment decisions’ and he emphasises that this can be achieved by high quality accounting standards. Up to 1970s, there was no uniform system for the preparation of financial statements and different companies used different policies, principles and bases according to their needs. This practice led to inconsistency between the financial statements of different entities or same entities prepared by different people, and made their comparison very difficult for different users. Dyson (2011) highlights this situation as ‘what was particularly puzzling to the public was that at the beginning of the week one set of accountants could decide that a company had made a profit and then by the end of that week another set of accountants would decide that it had actually made a loss’. This prompted the accountancy profession to regulate the accounting information and develop uniform principles and procedures which are today known as accounting standards. Accounting standards are statements of standard accounting practice issued by such body or bodies as may be prescribed by regulations (CA 2006, S464(1)). In the UK Financial Reporting...
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...Why Accounting Fraud? & Possible Solutions Brian Faanes Rasmussen College Author Note This research is being submitted on 9-12-2011 for Wendell Ellis A140 Financial Accounting 1 course at Rasmussen College by Brian Faanes Most accountants and auditors want to be accurate and honest when it comes to the recording of financial records and statements of the company or firm they work for. However, because of tight relationships between accounting firms and their clients, auditors may unintentionally distort the numbers. In this research paper let us examine some of the conflicts with current accounting practices and possible solutions to improve the corporate accountability and the financial reports they convey to the public and investors. There have been a number of accounting fraud sandals in the last decade, some of these companies include; Enron 2001, Worldcom 2002, Tyco International 2002 and locally, Tom Peters Company 2008. As a result of these most recent accounting frauds, congress passed the Sarbanes-Oxley act in 2002. The Sarbanes-Oxley Act * Applies to publicly traded companies * Established the Public Company Accounting Oversight Board (PCAOB). The PCAOB is a private sector, nonprofit corporation that oversees the auditors of public companies. The PCAOB protects the interests of investors by helping ensure fair, independent audit reports. * Requires that external auditors report to an audit committee, rather than to an organization’s management...
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...Why accounting is important The significance of accounting has never been more needed than today in the market, with the economic crisis and the worlds market in decline. Maybe a lot of people are losing their jobs in many fields, accounting stays is staying strong. The reasons why this is happening is because accounting is a very important aspect in the economy and the society. If we ask an accountant, why we need accounting, he will say that is the only way to grow our business and flourish. It is the backbone of the business financial world. It was created for the development of trade and commerce during the medieval times. Italy was the first country that had made a record of accounting entrees, and it was published in 1494 by a Venetian Monk. Record keeping has been around as long as the trade and business industries. A fact which is interesting is that the principles upon which the first accounting practises were established, has changed very little in the many hundreds of years that accounting is been in use. The process of recording those transactions has evolved the past two hundred years. Thanks to the creation of computers, many of the bookkeeping transactions that are very important can be performed by data entry clerks, but the result is still the same: it gives the financial statement the businesses needs to make decisions about the current status or projected future health of the business. The accounting is divided into two categories: financial accounting...
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...Why Pursue A Career in Accounting? Done by: Submitted to: As working as (Management Assistance) in Finance department; of ----- opened my eyes widely; to the importance of the Accountant’s Job; its privileges and its obstacles from so many levels. Like any powerful and specialized job such as Accounting; it has its own shares of gains and losses; from both personal and professional aspects. Although the Accountants after graduation; they don’t struggle a lot for job interviews or bothering themselves where to go! All they need to do actually; is to combine their goal & career’s ambition and match it; with any of the highly powerful corporation; located in the Abu Dhabi; like Deloitte; Ernest &Young; KPMG and PricewaterhouseCoopers. Otherwise there are the investment and retail banks; also the companies in all different fields of business recruit Accountants; to supervise their expenses and profits, and calculating earnings and costs. Even after finding Accounting jobs recently or earlier ; my colleges at work can improve their careers greatly by obtaining more qualifications; for example the Chartered Accountant qualification (CA), and Association of Chartered Certified Accountants (ACCA). Consequently; as I observe around the Finance department; their plans seems fixed as their numbers! They had it all planned from the moment they graduate. So what the Accountant exactly does? In simple words the Accountant; is some who manages the Accounting tasks; for the...
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...Six Sigma, Lean, and Kaizen J. Paul Seiberlich Siena Heights University Prof. Anderson February 5, 2015 Kaizen and Six Sigma are associated with the Quality Model for achieving success in business. The term Kaizen has many different uses ranging from referring to a principle of personal conduct to a company wide strategy for achieving business success (Imai, 1986). In the United States, one of its most common uses is as the name of a lean enterprise tool for improving work processes. In this use, it refers to a systematic and specialized application of problem solving to uncover and extract waste from a work process. Kaizen as a company wide strategy for achieving business success is derived from the writings of W. Edwards Deming although the completeness of that connection seems to be unrecognized. It abstracts from Deming’s work the ideas that improvements must benefit customers; that they must occur every day, everywhere, and be implemented by everyone; that management must lead the implementation and that managers must be models and agents of its adoption; and that management and non-management employees must operate cooperatively. (Vitalo, R. 2013) The term “Kaizen” has two uses. One use refers to the principle of continuous improvement and describes a fundamental element in the Quality Model and in Lean thinking. The second use refers to methods that either suggest (e.g., Teian Kaizen) or generate and implement improvement ideas. Of the methods...
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...“Creating Lean Suppliers” a Consider that the new corporate procurement strategy in support of your manufacturing business includes securing purchased critical parts and subassemblies from “lean” practicing suppliers. Your supply chain management in previous years has practiced the strategy of single sourcing as well as long-term partnering for critical purchased material. Prepare a list of bullets showing the advantages and disadvantages of staying with current suppliers (i.e. not switching) that currently do not have a “lean” in place and also define in the response your plan to achieve the new “lean” supplier requirement. I Advantage: * Better relationship – further involved in new production process * Better reputation (ethics) * Knowing the supplier better – its problems, cost-structure, and technology * Supplier may be more responsive * Creating “trust” II Disadvantage: * Cost of the BP team * Require extensive capital investment or extra personnel for suppliers * Time consuming (for the suppler to be lean) * Difficulty to change and sustain In order to achieve the new “lean” supplier requirement, I would want suppliers that have substantial responsibility during product development; the ability to accommodate and respond to the request of changes in product or manufacturing process; extensive capital investment or extra human resources. Also the suppliers that is reliable, and “self-reliant.” b Analyze Honda’s...
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...Final Case Submission: Avion Inc. 1. What parts of the supply chain are most closely involved with the situation in this case? What is the responsibility of each part in order to maintain a smooth flow of material? Procurement and Contracts: Should be responsible to amend the agreement that clearly defines what the service level requirements are, sets out the change control mechanism, the communication protocol and representative of both parties and review the agreement in conjunction with the supplier to remove any ambiguity. Category Management: Should be responsible for developing a SQM that will allow provide both parties with a forum to work in partnership and set targets and KPIs. Material Management: Should be responsible to understand the required and forecast inventory stocks and coordinate accordingly. Logistics: Should be responsible for transporting the product through the supply chain. 2. What initially appears to be the problem? What really is the problem(s) in this case? The problem initially appears to be that the vendor is not meeting the expected performance level required by the customer. However the problem is not with the vendor rather within Avion. It appears that the company does not have appropriate cross function engagement, rather working in silos. There is no obvious communication structure whereby the SCM understands the scope requirements and can translate this to the vendor. Also following contract award it is not clear what...
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...Does the accounting profession deserve its reputation? Why or why not? At the time Stephen Zeff wrote this article, the accounting profession deserved it reputation it had developed. From it humble begins in the early 19th century, to 2003 when this article was published, the accounting profession’s reputation became tarnished. At the time the Securities Act of 1933 and the Securities Exchange Act of 1934 were passed the intent was to create accounting standards for publicly traded companies. However as time went by the accounting profession faced scandals and deceit. The immense pressure placed on auditors to generate new revenue by retaining existing customers and generating new leads, clouded their judgement about addressing inconsistencies and asking questions. Greed and the pressure to make a profit, further tarnished the reputation the founders of the “Big 8” firms worked to develop. The accounting profession no longer represented honesty, integrity and accuracy. In a study printed int 1976 “the Big 8 firms lacked independence from their clients (Zeff, 9/2003, Pg 201).” Max Block summed it up in 1982 stating the accounting profession “was a term that lost some of its relevance (Zeff, 12/2003, Pg 267). Employees of auditing firms were pressured to expand their services to consulting to keep up with their competition. Professionalism deteriorated and auditors became focused on keeping the company’s they were working for happy. Employees that did not meet the demands...
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...A500 Accounting Ethics—Introduction Lecture Outline * Two Preliminary Questions: 1. Why is ethics taught in accounting, business, and tax schools? 2. Should ethics be taught in accounting, business, and tax schools? I. Why teach it?: * Because of these guys and others like them: Kenneth Lay, Founder Jeffrey Skilling, CEO B.A. and M.A. in economics from the University of Missouri. Ph.D. in economics from Houston University. On May 25, 2006, Lay was convicted of 10 counts of security fraud. On July 5, 2006, while vacationing in Colorado, he suffered a heart attack and died before sentencing. As a result, the federal judge that presided over his trial vacated Lay’s conviction. B.A. in business from the Southern Methodist University. M.B.A. from the Harvard Business School (top 5% of class). Convicted of conspiracy, securities fraud, making false statements, and insider trading. 24-year, four month sentence. The DOJ in 2013 agreed to reduce it to 14 years in return for Skilling releasing $40 million in restitution to victims, held up by appeals. Andrew Fastow, CFO B.A. in economics from Tufts University. M.B.A. from Northwestern University. In 2004, he pled guilty to two counts of conspiracy to commit wire and securities fraud, forfeited $30 million, and agreed to testify. Received a six-year sentence. Now works...
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...ACC 430 Governmental Accounting (Online) Chapter 1 Questions 1-2. Identify and describe the five environmental differences between governments and for-profit business enterprises as identified in the Governmental Accounting Standards Board’s Why Governmental Accounting and Financial Reporting Is-and Should be-Different. 1. Organizational Purposes-A governments organizational purpose is to provide public services for the well-being of citizens regardless of profit. Whereas a for-profit business’s organizational purpose is to generate a profit for the owner while providing services to the public. 2. Sources of Revenues-A for-profit business’s source of revenue is its net income (total revenues (sales)-total expenses). A government’s source of revenue is mainly from taxes. 3. Potential for Longevity-State and local governments rarely go out of business, because they are given the ability to tax. For this reason, governments view accounting operations on a long-term basis instead of short-term. Governments focus on maintaining services and how to meet future demands. 4. Relationship with Stakeholders-Since a Governments main source of revenue is taxes, which are paid by citizens; they are required to account for these public funds. Whereas a business can use its resources as it chooses. 5. Role of Budget-Business’s prepare a budget for planning and control purposes and are normally not provided to creditors or investors. Governments on the other...
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...Ethics and why they are important in using Accounting Software By Kevin Alexander Computerized Accounting acc231-f2014-ol-u-91502.001 Introduction Accounting is an honorable profession. Accountants must adhere to a set of standards that many other professionals do not have to be subject to. The ethical aspect for an accountant working in the public or private sector comes down to them being vigilant in making sure there are no outside chances of outside forces manipulating financial records which could lead to both ethical and criminal violations (Lister, 2014). Using ethical standards when using accounting software is very important whether you are an accountant, bookkeeper, or a small business owner. The following: technology, segregation of duties, and balance will provide some explanation to why ethics is important in using accounting software. Technology Automated accounting software brings neutrality in the management and reporting of financial information within a company. It provides a reduction of misstatement by unethical employees that handle the data. Yes, they may still input the wrong data for unscrupulous reasons, but accounting software tends to deter the process of doing this because errors can be found more easily. The accounting software must be easy to use and fit the company’s needs, this makes it more likely employees and accountants will not be willing to input incorrect information just to get the job done (Wicks, 2014). Segregation...
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...Why are Certified Public Accountants Important to the Accounting Industry, and why their role is Important to Business, Industry, and Society? Virginia Commonwealth University Writing and Rhetoric April 15, 2011 Why are Certified Public Accountants Important to the Accounting Industry, and why their role is Important to Business, Industry, and Society? CPAs became prominent after the 1800s when America started into the industrial era. They mainly did the basic bookkeeping for businesses at that time. As the industrial age grew and the government started to impose taxes, CPAs became more important to businesses as they now had to handle the filing of taxes for businesses. Although many people don’t see how important CPAs are to business, industry, and the economy, as well as, society. With the many changes over the centuries that government and CPA societies have put on CPAs, there have been some big changes in educational requirements, as well as governmental regulations. But in today’s society ethics has become the biggest problem that CPAs have to deal with and yet have more control over in the economy, and especially in business and industry. History has shown just how business and industry has needed CPAs, from controlling payroll and taxes, auditing accounting journals at the local mom-and-pop stores, to auditing financial papers of big corporations in order to let the investors at banks and Wall Street have some sort of an...
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...Have you ever had that feeling that you just know it’s right but you can’t explain why? It’s like bigger than a ‘gut-feeling’, it just sounds right in your mind. Although, you can’t really explain why, it’s quite confusing really. I’ll try my best to let you understand this feeling for you. For me, I was born in Gothenburg, a small, quiet place in Sweden. I had the pleasure of living there for nine years, I never really at the time thought what an amazing place it really is. I’m not trying to say it has everything because it doesn’t - it just feels like home to me. It’s where I was born and raised. When you’re born somewhere and live there for quite a long time, you genuinely start to make a connection with it. It sounds really silly, but if you move country, the connection you had with that place will become a lot more apparent. As if your whole life, your heart is developing a special, strong bond with that place, you just don’t know it until you’re gone. I remember how at the age of seven (when you start school in Sweden), I would take a bus and a train, I loved this, it made me feel really independent, as if my parents had built that faith in me. I felt like I really deserved it, I felt like an adult. It was a total of forty-five minutes journey to school, by myself. At the time, I didn’t think that was a big deal, everyone did that. When all your surroundings have the same routine as you, it’s as if that small, precious thing isn’t really that valued anymore. You...
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...to follow the path wherever I go. You were the one who never gave up on me, You are the one who loved me truly. You are always there to guide me, You made my wishes come into reality. Mother I never thought living in this place, but for her, I am their cute received grace. In God, she always prays, to have a child a little bit same as her face. She never got tired of telling me, the person she wanted me to be. She never gave up on me, even if I am a brat dummy. She wants us to be together, sharing thoughts with each other. I will never find another, Cause she's the only person I can "Mother". Moving On It's really hard to say goodbye, to my one and only guy. It's really hard to tell a lie, when my friends will ask me why. My tears came running down, it can even make the people drown. And sadly I didn't have the crown, to be the girl he'll be proud of in our town. Time is running fast, but my love for him didn't last. All I remember is our past, but forgetting him is a must. Moving on is what I will do,...
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