ACCT 2102 1nd Edition Lecture 1 Outline of Last Lecture I N A Outline of Current Lecture II The Differences Between Financial and Managerial Accounting III Types of Accounting A Public Accounting B Private Accounting IV Ethics A Ethical Principles B Ethical Standards Current Lecture The Differences Between Finanacial and Managerial Accounting Financial and managerial differentiate in 5 ways The first being the target audience Financial accounting creates financial sheets for external users like consumers and sharholders These are people that have no connection with day to day operations of the company Managerial accounting is for the internal users or those that are able to change the methods of the company like managers and employees The next difference is in the rules that govern the accounting principles For financial accounting GAAP or the Generally Accepted Accounting Principles set the rules for accounting In managerial accounting however there are no rules that govern how to account for the company The time focus between the two types of accounting is different as well Financial accounting refers to the past It includes balance sheets and statements that deal with data from previous dates and or periods Managerial on the other hand deals with the future Managerial accounting uses the past financial statements to make changes for the future Another difference is the output Financial accounting creates the four basic types of financial statements balance sheet statement of retained earnings statement of cash flows and income statement The output for managerial accounting is whatever is asked of the company Managerial accountants use the four basic statements to create spreadsheets and other data tools for their clients according to their wishes The last These notes represent a detailed interpretation of the professor s lecture GradeBuddy is best used as a supplement to your own notes not as a substitute difference is who performs the activity of accounting Financial accounting is performed by accountants only while managerial accounting can be done by anyone The Two Types of Accounting Public Accounting Public accounting is the most common of the two It is defined as working for a multitude of classes for accounting purposes Public accounting allows an accountant or accounting firm the ability to interact with multiple companies and firms and is not limited to one There are three types of public accounting as well Audit is the first which is accounting verification Tax is the next which involves both state and national level tax returns The last and newest is forensics Forensic public accounting deals with fraud and accountants are called in to analyze false accounting reports Private Accounting Private accounting is the next type of accounting Private accounting is where accountants work for one client only For example a private accountant may only deal with the accounting records of Chic Fil A Ethics Ethical Principles The Institute of Managerial Accounting has created four ethical principles Honesty fairness objectivity and responsibility are the four These ethical prinnicples are what the values of managerial accountants believe Ethical Standards The IMA also created the ethical standards which are how accountants achieve the values of the ethical principles The first standard is competence or the understanding The next three confidentiality integrity and credibility all deal with the trust and honesty accountants must have ethically