Financial Accounting has become increasingly standardised and Essay - 1

Financial Accounting has become increasingly standardised and harmonized across organizations in different industries, while Management Accounting continues to be highly variable - Essay Example The following paragraphs will explain in detail why there MUST be a compulsory implementation of harmonized accounting standards in financial accounting (Leuz, Pfaff, and Hopwood 3). Both approaches reflect the different purpose and role of financial and management accounting to the extent that is required for quality decision making activities. The users of financial statements will need the latest copy of the balance sheet to determine the total amount of assets that the company owns. The assets are the resources of the company. The assets include both the current as well as the non -current assets. Current assets include cash, receivables from customers and subsidiaries, inventory end, office supplies, office equipment, land, buildings, factory equipment and other assets. Likewise, the users of the financial statements are interested to get a copy of the latest balance sheet in order to know the total liabilities or payables of the company. The liabilities include both the current liabilities and long term liabilities. In addition, the users of the financial statements need the balance sheet in order to determine the total stockholders equity section. Further, the users of the financial statements need the latest copy with the possibility of obtaining the prior year or years financial statements to determine how much the company has generated in terms of sales and cost of sales. This data is found in the income statement. the income statement shows the total amount of gross profit, administrative and marketing expenses. Likewise, the users of the financial statements will need the statement of cash flows to determine where the cash inflows and cash outflows had gone to during the accounting period. Usually, the accounting period covers a twelve month period. Further, the following discussion of the Enron scandal will give a deeper reflection of the different different purpose and role of financial accounting to the extent that is required for quality