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Survey of Accounting (Accounting I)

8th Edition
Carl Warren
ISBN: 9781305961883

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Survey of Accounting (Accounting I)

8th Edition
Carl Warren
ISBN: 9781305961883
Textbook Problem

Financial vs. managerial accounting
The following statement was made by the vice president of finance of Electro Inc.: "The managers of a company should use the same information as the shareholders of die firm. When managers use the same information in guiding their internal operations as shareholders use in evaluating their investments, the managers will be aligned with the stockholders' profit objectives."
Respond to the vice president's statement.

To determine

Concept Introduction:

A Manager and shareholder can't use same information for making their decision. Theirs decisions are different. A shareholder need not to decide on day to day basis while a manager have to do same. A manager require more information than a shareholder for working.

To Prepare:

To decide whether statement of vice president is correct or not.

Explanation

A Shareholder only use financial accounting information while making decisions while a manger have to consider both financial and managerial accounting results. So, vice president while saying "the managers of a company should use the same information as the shareholder of the firm is not correct in his view...

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