• Why is it important that financial accounting systems report performance fairly and factually?
One of the biggest reasons it is important that financial accounting systems reports performance fairly and factually is to avoid legal actions in regards to accounting fraud. Recent downfalls of organizations due to financial misrepresentations and financial fraud have caused a huge downfall in our society. It is important for management accounting to be responsible for reporting accurately. Management Accounting is a system using financial accounting records as basic data to enable better business planning decisions. Financial management works closely with the company’s management to rely financial information. Falsifying financial records can cause the organization to lose accreditation as well. It is important that organizations report financial accounting performance fairly and factually to ensure that the organization is performing and operating within compliance guidelines, as well as in compliance with standards in regards to medical billing and coding reimbursements, errors, revenues, expenditures, audits, and so forth. This is important to avoid audits of financial records, losing accreditation, and/or legal actions being brought against the organization.
Baker, J.J., & Baker, R.W. (2011). Health care finance: Basic tools for nonfinancial managers (3rd ed.). Jones & Bartlett.
• What are the differences in financial reports for a nonprofit entity versus a for-profit entity?
Large differences are present in the financial reports of a nonprofit entity versus a for-profit entity, According to Baker & Baker (2011), for-profit organizations like partnerships, individuals, and corporations must pay income taxes. Nonprofit organizations like government (state, city, county, or state university) and volunteer (private school, church, or...