Keeping Two Sets of Records

Ethical Dimensions of Financial be Keeping two forget me drugs of Records Financial Accounting is an informational tool intended for twain managers of a company and for external parties of an organization as defined by Garrison. There is also an existence of some regulatory bodies requiring the use of several(predicate) principles accordingly within companies jurisdiction. In some cases, companies are required to stop two sets of accounting records. For example, publicly traded companies are required to use generally accepted accounting principles by the U. S. Securities and Exchange Commission.But GAAP and IFRS depreciation rules dont always match up. Companies routinely account for earnings and expenses differently on their annual reports, compared with their tax returns . A contributing factor to keeping separate records is the different treatment in measuring income. The two come neares used in measuring income is the accrual- ground and capital based accounting. As defin ed in our textbook Managerial Accounting by Garrison, Accrual accounting measures income as the difference between revenues recognized in the period versus and the expenses that are matched with those revenues.In contrast, cash basis accounting measures sales unless cash is actually received similarly with costs they are deducted from sales in the same period they are paid for cash disbursements. Varying approach to accounting for depreciation is also permiited such as charging expense everywhere a short period of time compared to its useful life of accepted assets. (straight line method versus the accelerated depreciation). This lets the fixed assets expense higher at the early years of its acquisiton, thereby reducing taxable income.This approach to depreciation poses a benefit to a company to actually invest in fixed assets which may lead to operating efficiences. Another perspective is that occupancys commonly does a separate keeping of record for tax accounting think in or der to minimize the possible amount of taxable income. In reality, companies tend to overstate income when the financial information is being presented to external creditors or investors, whereas understating it to government regulators.This is practically done by businesses to stay in businesswhich is logical and legal. The most important thing to be adhered is to report financials set within accordance to the tax regulations, otherwise a company give be subject to loss of credibilty and trustworthiness to stakeholders and other external parties. References Is It reasoned for a Business to Maintain Two Sets of Accounting Records? eHow. com http//www. ehow. com/info_7840065_legal-two-sets-accounting-records. htmlixzz29M1e7rFq