ACC220 Discussion Questions

Week 1 - DQ2 -

Why are ethics so important in the field of accounting?

Good ethics are essential in accounting. You are dealing with sometimes huge amounts of someone
else’s money. The business needs to be able to trust you with their records and money. Without a good
ethical rationale, you cannot be trusted as a money manager of any kind. Questionable ethics could
lead to stealing, money laundering, or book altering. Not only is that bad for the business but also for the
accountant, leading to fines or even jail time.

Discussion Question 1

When reviewing a financial report, why should information be reliable, relevant, consistent, and comparable? In other words, why are these accounting characteristics important? What kinds of problems could be created if a financial report is not reliable, relevant, consistent, or comparable?

All financial reporting should be reliable, relevant, consistent, and comparable.  These characteristics are important because finances are the backbone of any company.  If your financial report is not reliable you would be unsure of your assets and liabilities.  If your report was not relevant you would have too much information and the relevant information could get lost in the sea of information.  These reports need to be consistent in order to be able to spot patterns and trends in your spending or income.  If you know how much you have coming in, you know how much you can afford spending.  If not, you could bounce checks, lose accounts, or fail to pay employees. Your reporting should also be comparable with other financial reports in order to make sure your reports are reliable, relevant, and consistent.

Discussion Question 2

How does information from financial reports influence business decisions? Why is it important for business managers to understand the information found on financial reports?

Financial reports are important for influencing business decisions.  Your finances will determine when you can expand your business or when you may have to cut back on expenses.  They can tell you were your greatest assets are and where your weakness may be.  They can show you patterns in your spending and incoming.  It is also important for business managers to be able to understand the information in these reports.  Business managers make the decisions and they rely on financial reports to tell them where they can cut or add to the business.  When they can give raises, or bonuses, or even upgrade the equipment.  It also can tell the managers when a service or product is not doing great and they may need to eliminate that item.

1.     Discussion Questions

·         How would you describe the difference between financial and managerial accounting? What are the distinguishing features of managerial accounting?

While financial accounting focuses on preparing, recording, and securing cash and its reports, managerial accounting focuses on preparing reports for internal use by managers to make business financial decisions. One defining characteristic of managerial accounting is who you are preparing reports for; managerial accounting only prepares reports for internal users such as officers or managers of your company.  Another feature is what kind of reports; managerial reports are specific reports where financial accounting is more general.  Also, a managerial report is very detailed and pertains to certain aspects of the business. 

·         Select a management function— planning, directing and motivating, or controlling—and explain how that function relates to business as a whole. Next, select a different function listed by a classmate. Discuss with your classmate how the functions you each selected complement each other.

Directing and motivating is the most interesting of the three in my opinion.  This function does a all the coordinating of a company’s activities and resources such as scheduling, buying inventory and supplies, hiring and promoting employees.  Some examples of this function would be, putting together a company picnic, or getting a sports team together for out of work activities.  Performing reviews and handing out bonuses or creating a job fair to bring in more employees would be something that would fall under the directing and motivating function.  The flip side of this function would be all layoffs or disciplinary actions would fall under this heading. 

·         How does budgeting help management make good business decisions?

            Budgeting allows management to keep a good eye on where money is coming from and where it is going.  It allows control over income and outgoing by seeing where you can spare money for big purchases or where you may need to cut expenses.  Budgeting can also help management make good business decisions by tracking all money incoming and outgoing.  With a good budgeting system you can see exact where every dollar is being earned or spent. 

            From here management can make all kinds of good business decisions, like when it is most advantageous to expand, or upgrade, or even cut back.  Also, decisions such as when to invest or how much to invest, buy stocks, sell stocks, even buyout another company. 

·         What are some of the different types of budgets? Describe in detail one type of budget covered in the text. Describe what the budget is used for and what information it provides a business. As you respond to your classmates, discuss how the budget you described relates to the budgets they described. Discuss how a business benefits from each of the budgets.

There are several different types of budgets, for example, sales budgets, production budgets, direct materials budgets, direct labor budgets, manufacturing overhead budgets, selling and administrative expense budgets, budgeted income statements, and cash budgets.

The selling and administrative budget projects anticipated selling and administrative expenses for the budget period. Expenses are classified as either variable or fixed. Variable expenses per quarter are based on the unit sales from the sales budget. Fixed expenses are based on assumed data.

1.     Capstone Discussion Question

·         Think back over what you have studied and learned in this course. Do you have a new perception of or appreciation for the field of accounting and how it contributes to business? Explain

            This course was definitely not what I expected a basis accounting course to teach us about.  I learned a lot of terminology I did not know before.  And, that there is a lot more to basic accounting than I thought.  I did not know there were so many different parts to accounting.  I definitely have a new appreciation for how intricate even the simplest piece of accounting can be.  I have always known how important accounting was to a business.  I have worked for several small companies where you did multiple parts of different departments in order to keep the business running day to day.  This course did shed light on some parts of accounting I never did see because of working for small companies rather than large companies.