Final answer:
Financial controls ensure financial management based on accounting principles, while operating controls optimize daily functions based on management principles. Principles serve as standards or cause-effect statements and are essential for profitability in business. Profit, a key focus for firms, is derived after accounting for all costs.
Step-by-step explanation:
The financial controls referred to in the student's question are frameworks based on established accounting principles that organizations employ to manage their financial resources, ensure the accuracy and reliability of financial reporting, safeguard assets, and ensure compliance with laws and regulations.
Accounting profit, as part of these controls, considers only explicit costs, which are direct, out-of-pocket expenses.
On the other hand, operating controls are guided by management principles and methods that ensure the efficient and effective use of resources, adherence to company policies, achievement of organizational goals, and continuous improvement.
Operating controls influence the day-to-day functioning of a company, focusing on processes, people, and operations.
In business, principles underpinning controls are crucial for profitability, with privately owned firms aiming to gain profit, which is the residual after deducting all explicit and implicit costs from revenues.