Managerial Accounting Is Not Bound by Generally Accepted Accounting Principles

question 101

Essay

Managerial accounting is not bound by generally accepted accounting principles (GAAP)but clearly is influenced by GAAP.How do budgets and the budgeting process demonstrate connections to GAAP?

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Definitions:

Comprehensive Income

The total change in equity for a reporting period other than from transactions with owners, including all revenues, expenses, gains, and losses.

Trading Portfolio

A collection of financial assets such as stocks, bonds, commodities, currencies, and derivatives held by an institution or individual, primarily for the purpose of short-term trading and profiting from market movements.

Fair Value

The price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

Acquired Goodwill

Represents the premium paid over the fair market value of assets during the acquisition of a company.