II. Read the text through to find out the main differences between accounting reports and management accounting reports.

1. Accounting can be defined as an information system that measures, processes, and communicates information that is useful for decision-making. A distinction is usually made between the concepts of management and financial accounting.

2. Financial accounting refers to accounting information, that, in addition to being used internally by management, is communicated to those outside the organisation (governments, banks, employees, etc.). All outside users are generally satisfied with less detailed information than that provided to managers. Hence, financial accounting reports provide a general overview of the financial health of a business.

3. Moreover, financial accounting reports are generally produced less frequently than management accounting reports. Whereas financial accounting reports are normally produced annually, or perhaps biannually, management accounting reports, which are designed to monitor performance, are often produced on a monthly basis in a business of any size.

4. Financial accounting reports rarely include forecast information. They are essentially backward-looking and focus on actual results achieved. This does not imply that other users are unconcerned with the future. Rather, it reflects a concern that the publication of such information could damage the competitiveness of the business in some way, or that the information might be misinterpreted by users who are less used to reading accounting information.

5. Financial accounting reports may enter the public domain and may be relied upon by outsiders to evaluate the financial health of the business and to make comparisons with other businesses. In order to help users, the law and the accounting profession have aimed to regulate the form and the content of financial reports to ensure that:

- they contain basic information;

- the information produced is of reasonable quality;

- the information is produced in a uniform way in order to make comparisons easier.

6. Because it is important that all who receive accounting reports should be able tо interpret them, a set of practices has developed that provides guidelines as to how financial accounting should be done. The term used to describe these practices is generally accepted accounting principles (GAAР). These principles encompass the conventions, rules, and procedures necessary to define accepted accounting practice at a particular time. In other words, GAAP arise from a wide agreement on the theory and practice of accounting at a particular time. All the rules are usually developed by accounting bodies. The standards, applied for preparation of financial statements accepted by banks and Stock Exchanges in many countries, are called the International Accounting Standards (IAS). And they were developed by the International Accounting Standards Committee. The International Accounting Standards are regularly reviewed to clarify the issues previously not covered by them and to unify accounting policies applied by different countries.

III. Which of the following statements are correct?

1. Being defined as an information system accounting measures, communicates useful information for decision-making.

2. Financial accounting is a system of classifying and recording monetary transactions of an entity and the presentation of the results of these transactions and the entity’s financial position at the end of the accounting period.

3. Unlike financial accounting, management accounting deals with less detailed information.

4. Financial accounting reports provide a general overview of the financial position of a business.

5. Management accounting reports are produced less frequently than financial accounting reports.

6. As a rule, financial accounting reports always include forecast information.

7. Forms and content of financial reports are never regulated.

8. A special set of practices has been developed to provide guidelines for interpreting accounting reports.

9. Generally acceptable accounting principles are unchangeable, they are just like “laws” of nature found in physics or chemistry.

IV. Reread the text to find out which of its paragraphs deals with:

1) differences between financial accounting reports and management accounting reports;

2) the definition of accounting;

3) generally accepted accounting principles.

Дата добавления: 2015-10-13