a) Define accounting and discuss the users of accounting. The systematic recording, reporting, and analysis of financial transactions of a business. The person in charge of accounting is known as an accountant, and this individual is typically required to follow a set of rules and regulations, such as the Generally Accepted Accounting Principles. Accounting allows a company to analyze the financial performance of the business, and look at statistics such as net profit. There are two kind of groups who using accounting they are internal users and external users. The internal users include marketing managers, production supervisors, finance directors and company officers. And external users are investors and creditors. Investors those who are owners and they use accounting data to make a decisions to buy, hold or sell ownership shares of a company. And creditors are suppliers and bankers, they use the accounting data to evaluate the risks of granting credit or lending money. b) Discuss ethics is financial reporting and why ethics are a fundamental business concept. a) The president Phil McNally is the stakeholder in this situation. b) Ethics refers to the moral rights and wrongs of any decision a business makes. It is a value judgment that may differ in importance and meaning between different individuals. Businesses may adopt ethical policies because they believe in them or they believe that by showing they are ethical, they improve their sales. But they cannot hide anything from the financial statement however they succeeding in the business. c) If I had this situation I will do only ethically. If I found any misstatement that over stated the net income I should report to the head of the company also I move only with the right thing. I will not do any kind of unethical thing to the business. Part III 1) Family Department Store Income Statement For the Year Ended December 31, 2014 Net sales $735000 Cost of goods sold 548590 Gross profit 186410 Operating expenses 120000 Net income 66410 2) Family Department Store Income Statement For the Year Ended December 31, 2014 Net sales $700000 Cost of goods sold 553000 Gross profit 147000 Operating expenses 92700 Net income 54300 In my opinion, Debbie’s strategy the net income is more than Mike’s, and in Mike’s plan we can see the difference between their expenses Mike had a less expenses than Debbie’s. Therefore, implementing both strategies to their Family Department Store will surely make their profits higher and increase their net income.
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