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Financial accounting is the preparation of financial statements that can be consumed by the public and the relevant stakeholders. Financial information would be useful to users if such qualitative characteristics are present. When producing financial statements, the following must comply: Fundamental Qualitative Characteristics:
The following constraints have been identified for management accounting. The quantitative and qualitative characteristics of these constraints are meant to serve as controls or checks and balances when constructing a cost model or when using management accounting information.
Management accounting information differs from financial accountancy information in several ways: . while shareholders, creditors, and public regulators use publicly reported financial accountancy, information, only managers within the organization use the normally confidential management accounting information
Accounting, also known as accountancy, is the process of recording and processing information about economic entities, such as businesses and corporations. [1] [2] Accounting measures the results of an organization's economic activities and conveys this information to a variety of stakeholders, including investors, creditors, management, and regulators. [3]
The treatment of business combinations is irrational. IFRSs create accounting volatility that does not reflect the economic reality. Charles Lee, professor of accounting at Stanford Graduate School of Business, has also criticised the use of fair values in financial reporting. [43]
Financial statements are intended to be understandable by readers who have "a reasonable knowledge of business and economic activities and accounting and who are willing to study the information diligently." [2] Financial statements may be used by users for different purposes:
The interpretation of the economics underlying a transaction and even the wording of the accounting standards can vary between firms. This, along with the fact that a firm's financial statements are the responsibility of the firm's management, allows management to structure transactions to achieve desired accounting results, [2] by choosing an interpretation of the economics underlying the ...
The following outline is provided as an overview of and topical guide to accounting: . Accounting – measurement, statement or provision of assurance about financial information primarily used by managers, investors, tax authorities and other decision makers to make resource allocation decisions within companies, organizations, and public agencies.