Assignment Questions: 1. One of the differences between Managerial Accounting and Financial Accounting is reporting flexibility. Financial reporting is restricted by Generally Accepted Accounting Principles whereas reporting in Managerial Accounting has fewer rules. a) Why is it permissible to violate Generally Accepted Accounting Principles when preparing reports used strictly by company management? b) Should external users always have the same information as internal users? Explain. 2. The United States uses accounting standards developed by the Financial Accounting Standards Board (FASB) known as the generally accepted accounting principles (GAAP). This system relies on rules and regulations and thus is said to be a rules- based system. The rest of the world follows accounting standards developed by the International Accounting Standards Board (IASB) known as the international accounting financial reporting standards (IFRS). This system relies more on principles than rules. There is a movement to have one global standard, which would combine GAAP and IFRS. a) What are the differences between GAAP and IFRS? b) How does each standard handle research and development costs? c) What issues might arise with combining a rules-based with a principles-based system