Accounting Theory Assignment: AICPA Ethics and Accounting Practices

This assignment delves into the core concepts of accounting theory, contrasting financial and management accounting, and emphasizing the importance of ethical practices. It begins by outlining the key differences between financial accounting, which focuses on the company as a whole and provides external reports, and management accounting, which aids in internal strategic planning and budgeting. The solution highlights the American Institute of Certified Public Accountants (AICPA) and its role in establishing ethical standards for accountants, including integrity, objectivity, independence, and due care. The assignment underscores how ethical conduct is crucial for providing clients with accurate financial information, preventing conflicts of interest, and ensuring the reliability of accounting reports. The document also provides a list of references which support the concepts.

Running head: ACCOUNTING THEORY
ACCOUNTING THEORY
Name of the Student
Name of the University
Author Notes

1ACCOUNTING
Answer to question 1
Financial and management accounting are two different aspect of accounting
therefore there are plenty of differences present between financial management accounting.
The most important variance between financial and management is given below.
Management accounting Financial accounting
 Management accounting looks at
various way to solve management
accounting problems.
 Management accounting is primarily
used to create strategic plans taking
managers with creating budgets and
estimating upcoming income and
expenses (Weetman, 2019).
 In management accounting, reports
are more frequent and managers
generally reports it to the authority
on day to day basis. Reports of
management accounting are used
internally.
 There are no legal standards or
requirements present in management
accounting which can be used by
business if they wish.
 Financial accounting looks at the
company as a whole and solves the
problem of accounting.
 Financial accounting analyses the
company based on reports and
statements and provides solutions to
the problems.
 Financial accounting focus on
performance for a very specific time
frame and generally does not
conducted on day to basis. The
reports of financial accounting is
used and distributed outside of the
organisation.
 The financial statements produced
using financial accounting are
required to be audited by
independent CPA firm (Schroeder,

2ACCOUNTING
 The information’s created by
management accounting assess
through the past business reports and
statements and creates a business
forecast.
Clark & Cathey, 2019).
 Information’s created through
financial accounting is entirely
historical and financial statement
contain data for definite period of
time.
Answer to question 2
The American Institute of Certified Public Accountants (AICPA) is a professional group
accountable for emerging professional accounting ethical morals. The AICPA necessitates
professional accountants to act sensibly when engaging in accounting services and studying
subtle financial info (Duska, Duska, & Kury, 2018). Accountants should always practice
sound moral judgment in all of its accounting activities. Many negative results can occur in
accounting if an organisation does not follows ethical practices in accounting. The
importance of ethics in accounting is given below.
 Integrity is a part of ethics of business. Integrity requires an bookkeeper to be honest
and clear from their side. Accountant should restrict themselves from individual gain
and advantages using private information of an organisation. Accountant firms
develops code of conduct and ethics for accountants. The accountants should maintain
these ethics and conducts when preparing report for the company which will assist
them to provide true and accurate view of the business in the report.
 Objectivity and independence are crucial ethics in accounting. Account should be free
from encounters of interest and questionable business relationship when
accompanying accounting service failure to which may hamper the ability of the
accountant to deliver an honest view about the company’s financial info.

3ACCOUNTING
 Due care is the ethical value which requires accountant to perceive all technical and
ethical accounting standards before conducting the report. Due care requires
accountants to exercise competence, diligence and proper understanding of financial
information (Aifuwa, Embele, & Saidu, 2018). Business ethics aids accountant to
provide client with professional services and present truthful and accurate information
about the organisation.

4ACCOUNTING
References
Aifuwa, H. O., Embele, K., & Saidu, M. (2018). Ethical accounting practices and financial
reporting quality. EPRA Journal of Multidisciplinary Research, 4(12), 31-44.
Duska, R. F., Duska, B. S., & Kury, K. W. (2018). Accounting ethics. John Wiley & Sons.
Schroeder, R. G., Clark, M. W., & Cathey, J. M. (2019). Financial accounting theory and
analysis: text and cases. John Wiley & Sons.
Weetman, P. (2019). Financial and management accounting. Pearson UK.