The sec is given broad enforcement powers under the

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The SEC is given broad enforcement powers under the 1934 Act. If the rules of operation for stock exchanges prove to be ineffectual in implementing the requirements of the SEC, the SEC can alter or supplement them. The SEC can even suspend trading 24
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of a company’s stock. If substantive hearings show that the issuer failed to comply with the requirements of the securities laws, the SEC can “de-list” any security. Brokers and dealers can be prevented, either temporarily or permanently, from working in the securities market, and investigations can be initiated, if necessary, to determine violations of any of the acts or rules administered by the SEC. The SEC has been granted by Congress legal authority to establish accounting standards for companies soliciting investment funds from the American public; however, for now, the SEC allows FASB to set U.S. accounting standards with a few exceptions. Chapter 9: Managerial Accounting and Cost Concepts Describe the purpose of management accounting. Managerial accounting’s main purpose is to provide a firm’s management with information they can use to run the business more efficiently and effectively. However, managers also use financial accounting reports to accomplish these goals as well. Differentiate between management and financial accounting. The following table summarizes the main differences between managerial and financial accounting. Management Accounting Financial Accounting Variability Across Companies Unique competitive tool. There are no GAAP standards for management accounting reports and these reports tend to be specifically designed by each firm but usually follow some form of best practices. Uniform across companies and based on generally accepted accounting principles. Type of Data Both financial and nonfinancial data Restricted to financial data Availability of Data Data usually kept secret within the company Data often made public Use of Data Used for internal planning, control, and evaluation Used primarily by investors and creditors in deciding whether to provide capital to the company Describe the differences between accounting in a manufacturing environment and a service environment. Since the text also covers merchandising companies we have included a discussion of those types of firms as well. Merchandising companies buy finished goods and resell them to customers. This category includes wholesalers and retailers. 25
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Service companies do not produce products but provide services. These companies do not tend to have inventories since inventories are limited to products for resale and they don’t produce products. Manufacturing company produce products for resale. The following diagram from the text summarizes the differences between product and period costs for these three types of firms. Note that period costs don’t vary, only product costs do and that the term “product cost” is also applied to service companies to describe the costs associated with producing the service.
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  • Spring '16
  • Kenneth Cassell
  • Balance Sheet, Generally Accepted Accounting Principles

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