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Running head:BE-102-HW-WK9 1

BE-102-HW-WK9

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The users of accounting information include the internal and external users. The

external users include the creditors, investors, suppliers, customers, employees and

government organizations. On the other hand, the internal users of accounting information

include the management and operation managers.

The internal users employ the managerial accounting information in making a

decision. Some of the decision by the internal users include deciding on whether to sell or

buy business segments, analyzing the product’s profitability and operational units, deciding

on whether to purchase new production facilities, deciding on the need for cash flows to

support operations among others.

The external users like stockholders may use the information to know how the firm

manages its investments. The investors may use the information in guiding investment

decisions. Banks and the lending institutions may use the information to guide them in

decision making such as on whether to lend or how much they should lend to business. Other

decisions by external users include imposing a tax, buying or selling the entity’ shares among

others.

Three types of services offered by the CPAs include tax services, auditing, and

management advisory services. Through auditing, the company’s AIS is examined to

determine whether the financial reports represent its operations. The CPAs assists with tax

planning and tax-return. Management advisory services may range from planning corporate

to personal financial planning mergers. Other services may include AIS design, information

system studies, production scheduling and executive recruitment.

There are numerous differences between financial and managerial accounting. Some

of the key differences are that financial accounting keeps track of every entity’s financial

information. On the other hand, management accounting records as well as report both

entity’s financial and non-financial information. Users of financial accounting are both

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internal company management and external parties (Surbhi, 2014). Managerial accounting

users, on the other hand, are internal management only. Also, financial accounting is reported

publicly compared to the management accounting which is very confidential as it is for the

organization’s use. Financial accounting is conducted in a prescribed format. Conversely,

management accounting has no prescribed format. Other key differences include; financial

accounting is conducted for a specific period mostly one year while managerial accounting is

conducted according to management needs like half-yearly, quarterly, etc. For any company,

financial accounting information is compulsory for the purpose of auditing. Conversely,

management accounting is voluntary because no editing that should be done.

Forensic accountants tend to employ their investigative, auditing and accounting skills

to examine the financial statements of a company. They may be requested to work for federal

governments, police forces, insurance companies, banks among others. Forensic accountant’s

job includes; investigating and analyzing financial evidence, documenting their findings as

well as testifying in courts as forensic witness experts where they support their evidence.

Money has various characteristics which should be considered when determining if it

serves as good money. One of the characteristics is portability. Money should be portable. It

should be easily transported from one place to another even in bulk. It should be convenient

and easy to use. Durability is another characteristic. It is critical for money to be durable in

order to perform related functions of the store of value and medium of exchange (Ebert,

2016). Durability is required for an item that works as a medium of exchange as it retains its

value from a transaction to another. Divisibility is the third characteristic. Money should be

divided into small units to be used for small payments without losing its value. Another

characteristic is acceptability. Good money must generally be accepted by a population.

Other characteristics include hard to counterfeit, where money should not be easily copied or

faked and scarcity where it should be limited in supply which makes it maintain its value.

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The components of M1 are a currency which could be coins or paper money and all

checkable deposits. The M2, on the other hand, includes the M1 and other several near

monies that can be readily converted to checkable deposits or currency. The three categories

include small denominated timed deposits, saving deposits, and money market mutual funds

that are held by individuals.

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References

Ronald J. Ebert, R. W. (2016). Business Essentials. Pearson.

Surbhi. (2014, December 15). Difference Between Financial Accounting and Management

Accounting. Retrieved from https://keydifferences.com/difference-between-financial-

accounting-and-management-accounting.html

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