Financial accountants carry out significant services for the non-commercial and commercial firms in order to ensure that they are complying with legal regulations and requirements and financially sound. They are responsible for preparing the financial statements on the basis of the financial information. They maintain financial records, inventory processing, program administration and tax reporting (Holton, 2012).
Management accountants play a significant role in carrying out significant tasks for ensuring that the organization does not face any financial problems. They manage all the financial matters for driving the overall growth of the organization. They design the format of cost control and financial reports that assists in making decisions.
The financial accountant prepares the financial statements of the organization which provides an overview of the financial performance during a specific time period. The owner of the organization examines the financial statements to assess how the business is performing. The owner is able to determine and evaluate the debt, profitability and efficiency of the organization. The managers need financial information to plan, evaluate, monitor and execute business decisions. The employees are also interested to know the performance of the organization because it imposes an impact on their income and job security (Needles & Powers, 2012). The investors examine the financial statements to understand business performance and making an investment decision on the basis of that. The lenders and suppliers need information to assess the creditworthiness of the organization. The government also need accounting information for protecting the interest of different stakeholders.
The management accountant examines the budgeting process and takes actions for improving the financial performance of the organization. The managers and employees are able to make decisions on the basis of the information provided by the management accountants. The sales managers use the information to determine the impact of different pricing decision, creates a sales budget and examine business opportunities (Horngren, 2016). The production managers use material reports, variance reports and labour reports produced by management accountant. The employees are able to improve their performance because they get significant information from the management accountant. The senior management is to able to make future decisions with the assistance of the information.
The differences between the role of financial accountant and management are as follows:
The similarities between the role of financial accountant and management are as follows:
Conclusion
Management accountant should be hired for decreasing the cost and preparing an effective budget. Management accountant mainly produces information which is associated with the internal business process and also assists in making decisions. The management accountant can assist to decrease cost and prepare an appropriate budget for Carrie.
2. The ethical dilemma of Nathaniel can be addressed with the help of Langenderfer and Rockness model.
Step 1: Determine the Facts
Nathaniel stuck in an ethical dilemma where it seems difficult for him to decide whether he should go for the online assessment or not. Suzanne has not completed the exercise to become a Certified Financial Planner which makes Nathaniel think twice before proceeding for the assessment. He is not sure whether Suzanne has enough skills to provide financial planning advice. On the other hand, if he does not show his interest for the assessment then also he could be in trouble, he got this job as a favour from his wife’s parents and might lose it.
Step 2: Identify Stakeholder and Ethical Issues
Johns and Co. is an accounting practice firm and they have decided to provide a financial planning service. But for that Suzanne has to become a Certified Financial Planner in order to provide this service. If Nathaniel goes for the assessment and clears it then still it might possible that Suzanne won’t be able to provide financial planning service properly which may affect the business (Geulincx, Beckett, Ruler, Uhlmann & Wilson, 2006). She does not have any knowledge about it as she did not find time to complete the training exercise. At the same time if Nathaniel refuses for the assessment then the firm may lose the chance to spread the business. It also seems unethical to Nathaniel for giving an assessment on behalf of Suzanne.
Step 3: Specify the Alternatives
It is unethical and against the low, for Nathaniel to proceed for the assessment on behalf of Suzanne. Nathaniel should advise Suzanne to take time and go through the training exercise and complete the assessment by her own. Because she is the one who is going to play the role of financial adviser and must be aware of the responsibilities of it (Thompson, 2006).
Step 4: Compare Alternatives and Assess the Consequences
The alternative way may make Nathaniel lose his job and will increase the time for Johns and Co. to start providing the service of financial planning. But in the long run, they won’t face any problem; Suzanne will become a professional financial advisor which will help to increase the revenue for the firm.
Step 5: Make Your Decision
Nathaniel should go for the alternative option as it is the best option though it may make him lose his job he will feel confident and comfortable by following the ethical way. If someone or his wife came to know about his decision; he won’t feel shame as he has followed the ethical way (Thomson, Adams, Sartori & Baranski, 2005). He will be able to answer confidently of all the questions that might be asked to him.
3. A. Justine and Robert can select company structure for starting the new business. A company is considered to be a separate legal entity. It means the company has the legal rights to carry out processes and can incur debts, be sued and sue. The owner of the company can limit their personal liabilities and they would not be liable for the company debts. Justine and Robert can escape from the burden of debt if the business fails (Booker, 2010). A company is considered to be a complex business structure consisting of higher administrative and set up costs. The business will be owned by the shareholders and controlled by the directors. Justine and Robert can also form the organization in partnership. The sole trader and trust business structure is not applicable to this case.
B. Ravinda can select partnership business structure for carrying out its works. The partnership consists of two or more individual who carries out a business together. It is considered to be a separate entity because the partners are liable personally for the debts of the business. The partners would have shared management and control over the business. The income tax is not paid by the partnership on the income earned (Dlabay & Scott, 2011). The partners are liable to pay tax on the partnership income share which would be received by them. It would be helpful for Ravinda to minimise the tax payments wherever possible. The partnership business structure can assist to decrease tax payments which cannot be done through sole trader, company and trust structure.
C. Bronte should select a sole trader business structure for carrying out its business. Bronte will be responsible legally for all the aspects of the business. It consists of debts, losses and profits which cannot be shared with anyone. It is relatively inexpensive and simplest business structure. The sole trader can make all the decisions regarding operating the business and also employing people. The owner would have full control over the assets and liable for the debts. Bronte will be able to carry out the business whenever she gets back (Griffin, Ebert, Starke, Dracopoulos & Lang, 2014). The partnership, company and trust business structure is not applicable to this case.
D. Niv and Tony can select partnership business structure for carrying out their business operations. The structure is relatively easy to follow and not so expensive to set up. Both the partners would be liable for the debts of the business. Both the partners can share their roles, responsibilities and control over the business. Niv and Tony can split all their proceeds under this business structure. The legal rules and regulations need to be followed by the partners. Any partner can sign on the matters of the business. The works can be distributed as per the partnership terms and agreement (Smart, Megginson & Gitman, 2007).The partnership business structure can allow to distribute the powers which is not possible in sole trader, company and trust business structure.
References
Booker, M. (2010). The business. 8th ed. London: MaxCrime.
Dlabay, L. & Scott, J. (2011). International business. 5th ed. Mason, OH: South-Western Cengage Learning.
Geulincx, A., Beckett, S., Ruler, J., Uhlmann, A. & Wilson, M. (2006). Ethics. 2nd ed. Leiden: Brill.
Griffin, R., Ebert, R., Starke, F., Dracopoulos, G. & Lang, M. (2014). Business. 3rd ed. Toronto: Pearson Canada.
Holton, R. (2012). Global finance. 12th ed. London: Routledge.
Horngren, C. (2016). Management Accounting. 6th ed. Melbourne: P.Ed Custom Books.
Needles, B. & Powers, M. (2012). Financial accounting. 4th ed. Mason, OH: South-Western Cengage Learning.
Pandey, I. (2015). Financial management. 10th ed. New Delhi: Vikas Publishing House PVT LTD.
Sharma, N. (2010). Business Finance. 5th ed. New Delhi: Global Media Publications.
Smart, S., Megginson, W. & Gitman, L. (2007). Corporate finance. 3rd ed. Mason, OH: Thomson/South-Western.
Thompson, M. (2006). Ethics. 2nd ed. London: Hodder.
Thomson, M., Adams, B., Sartori, J. & Baranski, J. (2005). Moral and ethical decision making. 7th ed. Toronto, Ont.: Defence Research and Development Canada.
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