Question

Ch14 C1: Explain the purpose and nature of, and the role of ethics in, managerial accounting.

Answer 1

Answer and Explanation:

Purpose of Ethics- Ethical codes are the fundamental principles that accounting professionals choose to abide by to enhance their profession, maintain public trust, and demonstrate honesty and fairness.

Nature of Ethics- Independence and objectivity, Integrity, Confidentiality, professional confidence and professional behaviour.

Role of Ethics:

Understanding the ethical frameworks for independence, integrity, confidentiality and professional competence can help decision-making & enhance reputation of the field of accounting.

Answer 2

Answer:

Managerial accounting is a function of the internal part of a business that manages a company's financial information. Managerial accounting is often used only business to allocate business cost to goods and services

PURPOSE OF MANAGERIAL ACCOUNTING

PLANNING: managerial accounting is used to plan for future needs of the company. They plan budgets and also implement productive strategies to ensure profit

DIRECTING: this is a purpose of managerial accounting. It serves as a cooperation between employees and upper level management to answer questions and help solve problems.

CONTROLLING: the plans developed earlier by the accountants ensures that it is followed

ANALYSING: managerial accounting helps to analyse informations. They look for problematic areas and create ways to correct them to ensure increase in profit

REPORTS: Most of the goals and plans developed by the managerial accountants take the forms of report. This reports help them state clearly the conclusions they have reached and their solution to the problem.

ROLES OF ETHICS IN MANAGERIAL ACCOUNTING

Ethics are important when it comes to managerial accounting and companies usually develop a code of ethics or conduct to set expected ethical behaviour for accountants.

The IMA notes the following as ethics

Competence, Confidentiality, Integrity and Credibility.

Managerial accounting ethics ensures that all financial information is correctly relayed to business owners and managers. It also Ensures that there Is trust amongst each employees when it comes to sensitive business information