Discuss the regulation of financial accounting, and compare to the level of regulation of managerial accounting information.
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The financial accounting information prepared by a company is governed by accounting standards (generally accepted accounting principles), most of which have been established by the Financial Accounting Standards Board (FASB). The Securities and Exchange Commission has authority to set these standards, but it has generally deferred to FASB. In comparison, the practice of managerial accounting is unregulated. The information is not made available to the public, so managerial accounting is limited only by the value-added principle: the cost of preparing the information should not exceed the benefits to be received from using the information.
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