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Compare and contrast financial and managerial accounting
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Compare and contrast financial and managerial accounting
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Financial and Managerial Accounting: What's The Difference? Whether it is a sole proprietorship, partnership, corporation, or a limited liability company, all businesses survive on the buying/selling of goods and services for cash or credit. They may buy land and build office complexes, stores, or factories. They may buy supplies, equipment, merchandise to sell, and/or the raw materials required to manufacture goods. They hire employees, pay salaries and benefits. All of these "business" activities need to be measured, analyzed, and recorded. Accounting is the set of procedures used to analyze, measure and record said activities. For this reason, accounting is often referred to as the "language of business". Within the accounting realm, there are two main types: financial accounting and managerial accounting. Financial accounting generally abides by the GAAP to record the activities of a business and to report the results of a business's operations. Every transaction that occurs, both big and small, are recorded as an entry in a journal, and each type of activity is given an account in a general ledger (i.e. account payables and account receivables). Journal entries are then sorted by posting them in the appropriate general ledger account. This information (i.e. balances) in the general ledger accounts are what financial accountants use to prepare financial statements such as the income statement and balance sheet. ... ... middle of paper ... ...evitable that practitioners will encounter novel situations in their jobs, and thus will need ethical guidelines to handle them effectively. Ethical codes and standards, such as that provided by the IMA, are intended to provide such guidance. References Ethical Standards (2005). Institute of Management Accountants. Retrieved June 25, 2005 from http://www.imanet.org/ima/index.asp What is Managerial Accounting, Chapter 1. Unknown Author Resources: Cost Terminology and the Environment of Managerial Accounting. Retrieved from http://www.swcollege.com/accounting/students/env_reso1.htm On August 12, 2005. Smith, Katherine and Murphy (2005). Business and Accounting Ethics. Retrieved June 25, 2005 from http://acct.tamu.edu/smith/ethics/ethics.htm