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Over time, quite a number of accounting guidelines and rules have been developed by bodies like FASB and IASB. Do these standards serve any meaningful purpose? In this text, I concern myself with accounting standards and their relevance. In so doing, I will amongst other things discuss why we need accounting standards.
Wahlen, Jones, and Pagach (2012, p.1-20) point out that "the FASB and the IASB operate so that they can develop new accounting standards in a thorough, thoughtful, and efficient manner, with due process, and in open public forums." To begin with, it is important to note that accounting standards play a critical role when it comes to the enhancement of the comparability of financial statements. National, regional, and international boundaries no longer exist when it comes to trade and commerce. Indeed, the world has effectively become a global village. For this reason, there exists a need…
Arner, D.W., 2007. Financial Stability, Economic Growth, and the Role of Law. New York, NY: Cambridge University Press.
Fischer, P.M., Taylor, W.J. And Cheng, R.H., 2011. Advanced Accounting. 11th ed. Mason, OH: Cengage Learning.
Wahlen, J.M., Jones, J.P. And Pagach, D.P., 2012. Intermediate Accounting: Reporting and Analysis. Mason, OH: Cengage Learning.
accounting standards in use throughout the world in the next 5 years?
The need for a universal set of accounting standards was recognized years ago, the origins of which can traced back to early twentieth century where practitioners in the U.S. And elsewhere failed to implement uniform accounting principles. The call for uniformity went stronger when the U.S. stock market crashed in 1929. It was firmly believed by then that there should be uniform accounting standards which would limit the use of professional judgments made by the management and hence will enhance the comparability of the financial statements (Previts and Merino, 1998, pp. 161 et seq.). Subsequently, when the world's leading financial countries faced cases like Enron and others, the need for consistent and comparable financial reporting became paramount. The need become more evident with dramatic increase of cross-border transactions, multinational corporations, foreign direct investments comparable as well as increase…
This is important, because it shows how there is the potential for both harmonization and division. Yet, once you look at what is taking place around the world, it is obvious that a common set of ideas are being readily accepted in different countries around the world.
A good example of this can be seen by looking no further than China, where they announced that the country would follow IFRS standards. As they are going to be phasing in the different provisions one step at a time. This is significant, because it shows how globalization is causing a single form of accounting standards to be embraced. At the same time, the U.S. And EU have begun working together to integrate the different accounting standards in line with IFRS principals. This is important, because it shows how there is an emphasis to slowly integrate these ideas into one basic standard that…
A Brief History of World Accounting, 2010, Finance Professor. Available from: [2 February 2011].
China's Move on IFRS, 2007, ACCA. Available from: [2 February 2011].
Cultural Revolution, 2007, Economist. Available from: [2 February 2011].
Efficient Market Hypothesis, 2011, Investopedia. Available from: [2 February 2011].
" (Camfferman & Zeff, 2) Indeed, the purpose which seems to stand above many others as specific Standards are examined is the improvement of financial reports as informative documents inbuilt with the capacity to educate users as to the financial disposition and outlook of reporting entities.
The declared purpose of the IFRS is to improve the comparability, clarity, relevance and reliability of accounting processes and the resultant financial reporting across a global scale. (IASC Foundation, Framework) This purpose is directly correlated to the apparent direction in which the global economy has thrust itself across the last few decades, with the deconstruction of trade barriers and the forging of encompassing exchange agreements producing a circumstance where proponents view a categorical necessity in standardizing accounting practices. Therefore, in a discussion on the global applications of the IFRS, which is conducted by a consideration of the adoption challenges, procedures and experiences of some…
Bentley, L. (2009). IFRS Move Will Cost More in U.S. Than It Did in Europe, Study Says. IT Business Edge. Online at http://www.itbusinessedge.com/cm/blogs/bentley/ifrs-move-will-cost-more-in-us-than-it-did-in-europe-study-says/?cs=31615
Camfferman, N. & Zeff, A. (2007). Financial Reporting and Global Capital Markets. A History of the IASC 1973-2000. Oxford University Press.
Daske, H. (2006). Economic Benefits of Adopting IFRS or USGAAP - Has the Expected Cost of Equity Capital Really Decreased? Journal of Business Finance & Accounting, 33(3-4), 329-373.
Deloitte Touche Tohmatsu (DTT). (2007). Accounting Standards Updates by Jurisdiction: Financial Reporting Framework in Bulgaria. Online at http://www.iasplus.com/country/bulgaria.htm
Value of Accounting Standards
Accounting rules are designed to serve the capital markets and make these markets work efficiently. Accounting rules are essential to the efficient functioning of the economy because decisions about the allocation of resources rely heavily on credible, concise, transparent and understandable financial information. Without standard measures of the worth of a company, lenders and investors would have no way in which to evaluate the worth of the business, so these rules are essential to the capital markets. With the rise of multinational businesses, it is essential that these rules be uniform throughout the world. Generally accepted accounting principles (GAAP) are the accounting rules used to prepare financial statements for publicly traded companies and many private companies in the United States. In the United States, as well as other countries practicing English common law system, the government does not set accounting standards, in the belief that the…
Hunt, Isaac C. "Speech by SEC Staff: Financial Reporting and the Global Capital Markets." March 23, 2000. June 7, 2005. .
Leisenring, James J. "FASB Perspectives on the Development of International Accounting Standards." March 9, 1998. Financial Accounting Standards Board. June 6, 2005. .
Murray, John C. "Cross-Border Real Estate Transactions: The Development and Implementation of International Accounting Standards." 2000. June 6, 2005. .
"Seeking International Collaboration on Accounting Standards." October 21, 2003. Japan Business Federation. June 7, 2005. .
International egulation, Accounting Standards and Australia
Background and Need for egulation
International regulation is a necessity in the finance arena as the world bears a high rate of interconnection, particularly via banking and accounting. In 2008, Europe was given international accolades for its attempts to strengthen the world financial system and protect nations all over the world from a serious crisis. "Europe led the way last year in facing down the global financial crisis, restructuring our banking system and strengthening the global financial system. The European Union was also at the forefront in calling for a new forum for economic cooperation of G-20 leaders. And from the outset of the crisis, it was Europe that promoted the fiscal stimulus -- and sought to coordinate it globally -- that has been a major factor in preventing recession becoming a world-wide depression" (Brown & Sarkozy, 2009).
The reality is that in order…
AAsb.gov.au. (n.d.). General Information. Retrieved from Aasb.gov.au: http://www.aasb.gov.au/About-the-AASB/For-students.aspx#qa1284
Beke, J. (2011). International Accounting Standardization. International Journal of Economics and Management Sciences, 37-50.
Bowrey, G. (2007). A discussion on Australia's adoption of International Accounting Standards. Retrieved from uow.edu.au: http://ro.uow.edu.au/cgi/viewcontent.cgi?article=1368&context=commpapers&sei-redir=1&referer=http%3A%2F%2Fwww.google.com.au%2Furl%3Fsa%3Dt%26rct%3Dj%26q%3Daustralia%2520benefits%2520of%2520standardised%2520accounting%26source%3Dweb%26cd%3D4%26cad%3Drja%26
Deegan, C. (2009). Financial Accounting Theory. New York: McGraw Hill .
Apart from this FASB has decided that capitalization of IP&D will only apply to business combinations. When assets are purchased, and they are not viewed as businesses under GAAP in U.S., would continue to have IP&D as expenses. One of the results could be to have businesses which are now following GAAP to find out new methods so that they could avoid capitalizing IP&D. The importance of this issue can be seen in the following statement by David Mosso, the FASB chairperson "ule 203 status adds that weight by strengthening the link between Federal financial accountants and the rest of the profession."
To conclude, it could be said that getting information regarding accounting changes is not so difficult today. There are many issues on accounting and auditing that can be resolved through the search of sites that exist for the purpose of providing accounting and auditing related information.
Brackney, Kennard S; Witmer, Philip. R. The European Union's Role in International Standards
Setting: Will bumps in the Road to Convergence Affect the SEC's Plans? The CPA Journal. November, 2005. Retrieved at http://www.nysscpa.org/cpajournal/2005/1105/infocus/p20.htm . Accessed 14 November, 2005
De Bell, Tony; D'Arecca, James. Sweeping Changes Coming in Worldwide M&A Accounting. 20
October 2005. Retrieved at http://www.cfodirect.com/cfopublic.nsf/vContentPrint/1CBFC24756BEFCEA852570A0006590DA?OpenDocumentAccessed 14 November, 2005
history of the International Accounting tandards Board (IAB) begins with the inception of Board of the International Accounting tandards Committee (IAC) in 1973. The Committee operated until 2001. The reason for the inception of the Committee was an agreement between the accountancy bodies in a variety of countries, including Australia, Canada, France, Germany, Japan, Mexico, the Netherlands, the United Kingdom and Ireland and the United tates.
The function of the Committee was to set standards for the international professional activities of the accountancy bodies under the agreement. The International Federation of Accountants function to organize these activities. In 1981 the IAC received full autonomy to set the international accounting standards. Their function was further to publish discussion documents on accounting issues with international concern. In the year 2000, the IAC Board approved a new constitution as part of a restructuring program. In the same year, the European Commission's plans to…
IASB Web site. www.iasb.org.uk/
QuickMBA.com. "Financial Accounting Standards." 1999-2004. http://www.quickmba.com/accounting/fin/standards/
Wikipedia. "The International Accounting Standards Board." http://en.wikipedia.org/wiki/International_Accounting_Standards_Board
Ethics in Business: Accounting Standards
Ethics in Business
The objective of this work is to address the relationship among the FASB, SEC, and PCAOB and to provide explanations of basic accounting theories, assumptions and principles; and finally to evaluate the role of ethics in accounting.
Victor, G. & Levitin, M. (2004) Current SEC and PCAOB Developments -- September 2004. The national conference of the AICPA in relation to recent SEC developments convened in Washington D.C. And boasted more than 2,000 attendees from "accounting firms, private industry, and government" while representatives from the SEC, Public Company Accounting Oversight Board (PCAOB), FASB International Accounting Standards Board (IASB) and AICPA shared their knowledge on various issues. Key was ethical standards among items on the agenda of the professional attending the meeting." (Victor and Levitin, 2004)
AICPA SEC Practice Section (SECPS) effectively changed its name and is now known…
Not only are accountants responsible in their professional judgments they also are under a requirement to follow "ever more prescriptive and detailed rules." (Pollock, 2005)
Summary & Conclusion
The new and differentiated types of technological applications that may be utilized in the accounting process leaves multiple methods open for use in accounting standards and practices. It is held by many experts reviewed in the process of reviewing the literature related to this work in writing that the many applications available have led to an entire new world in accounting. It appears that it is time to lay aside the hard-line regulations and rules and utilize that which is most effect, most expedient, most efficient and most ethically correct in choosing accounting standards in the contemporary and technologically advanced world.
An international standard would correct this disparity between the two sets of regulations.
The U.S. Financial Accounting Standards Board (FASB) was established to standardize accounting rules to ensure there was consistency in accounting across the country. Now Generally Accepted Accounting Procedures (GAAP) mean that an investor or stakeholder can review an organization's financial data and know that the rules applied are the same as comparative organizations. The acceptance of the IASB as the primary rule making body for the global business community would achieve the same effect.
Currently, national accounting rules impact accounting numbers. Differences in socioeconomic functions of accounting lead to differences in the processes of accounting regulation as well. Enforcement and interpretation of accounting regulations too is different by nation. Allowing an international body, such as the IASB, to be the primary rule maker would also ensure that enforcement and interpretation was consistent for all organizations, no matter…
About Us. No date. IASB. May 8, 2009 .
Gebhardt, G. 2000. The Evolution of Global Standards in Accounting. The Brookings Institute. May 8, 2009 .
Who We Are and What We Do. No date. IASB. May 8, 2009 .
The International Accounting Standards Board (IASB) currently has three types of active projects on their agenda. These include an agenda consultation project, financial crisis related projects, and memorandum of understanding projects. The following is a summary of these current active projects, their timetables established for the achievement of milestones, as well as the conceptual frameworks involved in the projects.
The first type of project currently active on the agenda of the IASB is an agenda consultation project in which the IASB initiated a formal public agenda consultation for the first time in July 2011. This consultation was focused on the future work plan of the IASB, and was aimed at obtaining input from the public regarding the work plan and its direction and balance. The agenda consultation was conducted with broad public participation, including awareness through conferences in Europe, North America, and South America, in which small group meetings…
IFRS. (2011) http://www.ifrs.org/Current+Projects/IASB+Projects/IASB+Work+Plan.htm . Retrieved 8 November, 2011.
Whittington, G. (2008). Fair value and the IASB/FASB conceptual framework: an alternative view. Abacus, 44(2), 139-68.
IAS 17 Leases
Explain the key features of the current accounting standard. You should use at least one illustrative example for lessee accounting from a published set of financial statements to illustrate the effect of the standard
IAS 17 accounting standard establishes and elucidates the pertinent accounting procedures and also disclosures that are supposed to be employed in accounting by lessors and also lessees. The lessor is the owner of the underlying asset while the lessee is the party that opts to make use of the asset at that point in time. One of the key features of the accounting standard is the classification between an operating lease and a finance lease. A financial lease is a contract or agreement whereby all of the risks and the rewards that are characteristic to the ownership of the asset are transferred to the lessee. On the other hand, an operating lease is…
IFRS, May 2013, Exposure Draft Leases, IFRS Foundation.
IFRS, May 2013, Exposure Draft Leases: Illustrative Examples, IFRS Foundation.
International Accounting Standard 17: Leases. IFRS Foundation.
Epstein, B.J., Jermakowicz, E. K, 2008, Wiley IFRS 2008: Interpretation and Application of International Accounting Financial Reporting Standards. Hoboken: John Wiley and Sons, Inc.
Several terms and definitions are valuable to understand financial statements. In the United States, financial statements of public corporations are produced in accordance with the U.S. Generally Accepted Accounting Principles. These principles govern how the information for financial statements is compiled and presented. The purpose of these principles is so that all stakeholders can easily understand the statements and make comparisons across both time and across different companies, because the statements are produced and presented in a consistent manner. The International Financial eporting Standards (IFS) are the international equivalent of GAAP. While several countries utilize a national version of GAAP (U.S., Canada, UK, etc.), more than 100 countries use IFS, making this set of standards the most widely-adopted in the world. There is a move to converge national GAAP standards with IFS, including a multi-year project to converge U.S. GAAP with IFS. For now, however, IFS represents a different…
No author. (2012). Generally accepted accounting principles (GAAP). Investopedia. Retrieved August 18, 2012 from http://www.investopedia.com/terms/g/gaap.asp#axzz23vrKSd9Q
PCAOB.org (2012) PCAOB oversees: The auditors of companies to protect investors. Public Company Accounting Oversight Board. Retrieved August 18, 2012 from http://pcaobus.org/Pages/default.aspx
SEC.gov. (2012). The investor's advocate. Securities Exchange Commission. Retrieved August 18, 2012 http://www.sec.gov/about/whatwedo.shtml
Accounting forms the overall backbone of the financial world. Financial markets are predicated on consumer and user confidence. Without confidence, consumers attempting to make financial decisions will be doing so using inaccurate and incomplete information. The lack of transparency regarding the truthfulness of reported numbers creates uncertainty within the capital markets. This uncertainty regarding the accuracy of information ultimately undermines the overall financial system, causing harm to society in the process. Investors will require higher rates of return, individuals will become unlikely to invest, and innovation could become stifled, harming the quality of life for society overall. Accounting standards, particularly those from the IFRS, are required to help maintain confidence in the reliability of reported financial performance. These standards, such as IFRS , are often amended to reflect the economic realities of business transactions. These changes, although well intended, may often have unintended consequence. This is particularly true for IFRS…
8) Jeffers, Agatha; Mengyu Wei; Sidney Askew (2010). "The Switch from U.S. GAAP to IFRS." Proceedings of the Northeast Business & Economics Association: 48 -- 54
9) Oler, Derek K., Mitchell J. Oler, and Christopher J. Skousen. 2010. "Characterizing Accounting Research." Accounting Horizons 24 (4): 635 -- 670
10) Perks, R.W. (1993). Accounting and Society. London: Chapman & Hall. p. 16. ISBN 0-412-47330-5.
The findings of this report will be valuable to two different audiences. The first consists of accounting regulatory bodies. These bodies are working towards convergence and are presently struggling with the resistance from the business community. Understanding the nature of that resistance is key to finding ways of overcoming it. For the large publicly traded corporations themselves, this report will help them understand why they and their peers are resistant, and this will shed light on whether or not that resistance is justified. Convergence is coming whether the corporate world is ready for it or not, but the key for corporations is to understand what convergence is, why it is important, and which elements of their resistance are not worth the effort. For both parties, it is important to work together to make the convergence process as smooth as possible, and that is going to take a greater…
Qu, X. & Zhang, G. (no date). Measuring the convergence of national accounting standards with International Financial Reporting Standards: The application of fuzzy clustering analysis. Xiamen University. In possession of the author.
Larson, R. & Street, D. (2004). Convergence with IFRS in an expanding Europe: Progress and obstacles identified by large accounting firms' survey. Journal of International Accounting, Auditing and Taxation. Vol. 13 (2004) 89-119.
AICPA. (2011). International Financial Reporting Standards (IFRS): An AICPA backgrounder. American Institute of CPAs. In possession of the author
AICPA (2010). Financial system considerations in IFRS conversion projects. American Institute of CPAs. In possession of the author.
Accounting for Partnerships
Businesses can be classified into various forms of ownership. In this text, I concern myself with partnerships. In so doing, I will discuss partnerships and the various advantages as well as disadvantages associated with this form of business ownership. Further, I will also highlight the Financial Accounting Standards (FAS) governing accounting for this form of business ownership from creation and operation to liquidation. Partnerships' tax consequences will also be discussed.
Partnerships: Advantages and Disadvantages
Just like any form of business ownership, partnerships also do have several advantages and disadvantages. A partnership according to Needles, Needles and Powers (2010) is "an association of two or more persons to carry on as co-owners of a business for profit." In that regard, a partnership is formed when two or more people come together with an aim of initiating a business activity. Individuals may be motivated to start a partnership form…
Clifford, D.C., Warner, R.E. & Warner, R. (2008). Form a Partnership: The Complete Legal Guide (8th ed.). Berkeley: Nolo.
Eisen, P. (2000). Accounting (4th ed.). Hauppauge, New York: Barron's Educational Series.
Needles, B.E. & Powers, M. (2010). Financial Accounting (11th ed.). Mason, OH: Cengage Learning.
Pride, W.M., Hughes, R.J. & Kapoor, J.R. (2011). Business (11th ed.). Mason, OH: Cengage Learning.
To expressly explain the similarities and differences that exist between the GASB and FASB accounting standards it is imperative that we first examine the philosophical approaches that the boards have taken (Marsh & Fischer, 2011). These are found in the board's concept statements. The boards use the concept statements to develop accounting standards. The FASB conceptual framework focuses on provision of best information that influences decisions made by creditors, investors, and entities interested in commercial and not-for-profit activities. The GASB's framework, on the contrary, focuses on accountability and opposed to aiding in decision making processes (Marsh & Fischer, 2011).
Areas of potential differences between GASB and FASB lie in recognition, measurement, display, and disclosure. ecognition differences arise on whether an item should or should not appear in a financial statement. In as much as SFAS No. 116(1993a) addressed contributed services, the GASBS No. 33(1998) failed to (Marsh &…
Marsh, T. & Fischer, M. (2011). FASB/GASB Recognition and Reporting Differences: A
Nonprofit Sector Perspective. Journal of Accounting and Finance, 11(1).
This model could then be customized for the needs of the different companies.
Sankaran and AlHashim (2006) make a compelling case regarding the need for harmonized accounting standards and practices. In addition to the globalized economy, they also rightly point to the benefits of such harmonization for corporations - including a greater ability to keep track of expenses and a better way of reconciling different accounting practices in its branches worldwide. Furthermore, Sankaran and AlHashim (2006) also allay fears that harmonization is equivalent to imposing only one accounting system around the world. Instead, they highlight the need for commonality, for a web-based accounting system that lends itself to different accounting practices.
The paper makes a strong argument, and the data regarding the need for a harmonized accounting system is compelling. hile this article may present a challenge for readers unfamiliar with basic programming language, the inclusion of a generic algorithm…
Sankaran, Siva and Dhia D. AlHashim. 2006. "An Accounting Information System for Harmonization."
Journal of American Academy of Business, Cambridge. 9(2): September.
Yet, financial statements and managerial accounting reports can be highly effective nonetheless. Sometimes they will merely confirm what the proprietor already knows, but there are inevitably going to be times when they will reveal that the proprietor's assumptions about the nature of the business are false. Moreover, accounting can act as essentially a second opinion. The proprietor may feel one thing is true, but the numbers can reveal something different.
Overall, accounting is an essential component of any business. Sole proprietorships often make less use of accounting, in part because the law does not obligate them to engage in any more than the most rudimentary accounting. However, proprietors should not overlook the value of accounting. Accounting helps to reveal the business' past performance, but can also be used to enact organizational controls today and to help plant for more effective operations in the future. By understanding the firm's cost structure…
Marshall, David H.; McManus, Wayne W & Viele, Daniel F. (2008). Accounting - What the Numbers Mean. McGraw-Hill/Irwin, New York, 2008.
Such adjusting entries will help to improve the accuracy of financial statements. Adjusting entries is necessary because accrual accounting systems demand that the events are recorded accurately. They are not to be recorded strictly on the basis of cash transactions, and all of these adjustments serve to translate the accounting figures that arise from the cash accounting to accrual accounting by incorporating all of the different non-cash transactions and ensuring that every element of the income statement and balance sheet is correct.
On a computerized accounting system, there might be software that can actually make these entries. If not they will need to be entered manually into the system.
As with any accounting, there are certain ethical issues that need to be understood. The accrual statements are where we report our profits and losses. It is important that they are completed accurately. Any fraud is illegal and cannot be tolerated.…
No author. (2012). Adjusting entries. Accounting Coach.com. Retrieved November 29, 2012 from http://www.accountingcoach.com/online-accounting-course/08Xpg01.html
The management accounting leads candidates into finance, risk management and even production management. hile CMA certification is not necessary to pursue a career in management accounting, it is recommended. The IMA claims that certified management accountants earn on average $25,000 more per year than non-certified peers (IMA, 2011).
As with the accounting profession in general, there is increased demand for management accountants. CMAs are in demand because of their ability to contribute to the profitability of businesses, and demand for CMAs is expected to grow in coming years. Because CMA job duties are less structured than those of financial accountants or auditors, CMAs enjoy greater career flexibility.
Both types of accounting positions are poised to enjoy significant growth. There is also a trend in business, particularly since Sarbanes-Oxley, of looking to accounting professionals to lead firms. More CEOs are coming from the accounting stream than ever before, which highlights the…
Bureau of Labor Statistics. (2011). Occupation outlook handbook 2010-2011: Accountants and auditors. BLS. Retrieved March 20, 2011 from http://www.bls.gov/oco/ocos001.htm
IMAnet.org, various pages. (2011). Institute of Management Accountants. Retrieved March 20, 2011 from http://www.imanet.org/ima_home.aspx
Taub, S. (2003) Now playing: CFO as CEO. CFO Magazine. Retrieved March 20, 2011 from http://www.cfo.com/article.cfm/3007934
By re-characterizing the epo 105 dealing as a sale, Lehman detached the account from its balance sheet (Durden, 2010).
Lehman frequently augmented its utilization of epo 105 transactions in the time previous to reporting interludes to decrease its openly reported net leverage and balance sheet. Lehman's intermittent reports did not reveal the money borrowing from the epo 105 transaction, even though Lehman had in reality borrowed tens of billions of dollars in these dealings, Lehman did not reveal the acknowledged responsibility to pay back the liabilities. Lehman utilized the money from the epo 105 dealings to pay off other dangers, thus dropping both the entire debts and the entire assets accounted for on its balance sheet and decreasing its power percentages. Therefore, Lehman's epo 105 dealing was made up of a two-fold procedure: performing epo 105 dealings followed by the utilization of epo 105 cash borrowings to pay down debts,…
Durden, Tyler. (2010). The "Repo 105" Scam: How Lehman Fooled Everyone (Including
Allegedly Dick Fuld) and How Other Banks Are Likely Doing This Right Now. Retreived
April 10, 2011, from Web site: http://www.zerohedge.com/article/repo-105-scam-how-lehman-fooled-everyone-including-allegedly-dick-fuld-and-how-other-banks-a
Goldstein, Jacob. (2011). Repo 105: Lehman's 'Accounting Gimmick' Explained. Retreived April
As required under Statement of Financial Accounting Standards No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets, WB must evaluate the carrying value of PC and T. against the fair value, as determined by the market capitalization of the two companies at the official spin-off date. In this case, both PC and T. will qualify as discontinued operations because after the confirmation of the transaction neither will be a part of the business or parent company.
WB maintains a March 31 end of year and the stock sale was dated May of 2000 which may cause a reporting concern. It is crucial that WB reports these events properly for the sake of accuracy. WB will be responsible to verify if any changes occur in their end of year reporting under SFAS No. 131. "The registrant, in consultation with its counsel, is responsible for determining whether a fundamental change…
SEC Regulations Committee. (June 12, 2001). Section C - Changes in Segment Reporting. Joint Meeting with SEC Staff. Retrieved on February 7, 2005, at http://preview.aicpa.org/belt/sec06_01.htm
Yungmann, George, & Taube, David. (Jul/Aug 2002). GAAP Net Income Measures Up. Retrieved on February 7, 2005, at http://www.nareit.com/portfoliomag/02julaug/accounting.shtml
"Management believes that the accounting estimates employed are appropriate and the resulting balances are reasonable; however, due to the inherent uncertainties in making estimates actual results could differ from the original estimates, requiring adjustments to these balances in future periods."
ased on the data retrieved and the projections made, the accounting division will proceed to the development of the consolidated statements for all of GM subsidies and the overall group. There are 24 consolidated statements, as follows: Discounted Operations; Asset Impairment; Investment in Nonconsolidated Affiliates; Marketable Securities; Variable Interest Entities; Finance Receivables and Securitization; Inventories; Equipment on Operating Leases; Income Taxes; Property - Net; Goodwill and Intangible Assets; Other Assets; Accrued Expenses, Other Liabilities and Deferred Income Taxes; Long-Term Debt and Loans Payable; Pensions and Other Postretirement enefits; Commitments and Contingent Matters, Stockholders' Equity; Earnings per Share Attributable to Common Stocks; Derivative Financial Instruments and Risk Management; Fair Value of…
1. 2007 General Motors Annual Report. Page 9. On the Internet at http://www.gm.com/corporate/investor_information/docs/fin_data/gm07ar/download/gm07ar_full.pdf.Last retrieved on February 15, 2009
2. General Motors Mission Statement, 2009, on the internet at http://www.samples-help.org.uk/mission-statements/general-motors-mission-statement.html . Ast retrieved on February 16, 2009
3. Supplier Diversity, Website of General Motors, 2009, on the internet at http://www.gm.com/corporate/dealers/diversity/index.jsplast retrieved on February 16, 2009
4. Management's Discussion and Analysis, Website of General Motors, 2009, on the internet at http://www.gm.com/corporate/investor_information/docs/fin_data/gm07ar/content/financials/mda/mda_10.htmllast retrieved on February 16, 2009
These are considered to be unrealized gains, but for hold-to-maturity securities these gains/losses are not expected to be realized at any point. The company will note the fair value change in a footnote, but will not record such a change on either the income statement of balance sheet (Spiceland, et al.).
If, however, it becomes necessary to sell investments previously classed as hold-to-maturity, then the following adjustments are made. The cash received from the sale is recorded along with any discount on bond investment is sitting as an asset. The investment in the bonds will be recorded at face value. Any profit above face value will be recorded as gain on investments. This essentially ensures that the asset for discount on bond investment is reversed as a result of the sale. FASB No. 115 lists six conditions under which a change of security status from HTM could occur, including deterioration…
Spiceland, D., Sepe, J., Nelson, M. & Tomassini, L. Intermediate Accounting.
Statement of Financial Accounting Standards No. 115: Accounting for Certain Investments in Debt and Equity Securities. FASB. Retrieved April 23, 2010 from http://www.fasb.org/cs/BlobServer?blobcol=urldata&blobtable=MungoBlobs&blobkey=id&blobwhere=1175818827848&blobheader=application%2Fpdf
Leone, M. (2008). Revised fair-value rule is weaker: Moody's. CFO Magazine. Retrieved April 23, 2010 from http://www.cfo.com/article.cfm/12623892/c_12624199?f=home_todayinfinance
However, when a shock happens that changes that pattern, the information is no longer relevant. In periods of turmoil, only the most up-to-date information is relevant. The usefulness of the information wanes quickly as the behavior of the company becomes more erratic. After a period of erratic behavior and change, the company may be forced to make internal changes that affect the way they do business. They may make changes that affect their inventory management, sales cycle, stock levels, supply chain, distribution network or other fundamental business functions. New patterns may emerge and the old information no longer applies.
The term "relevancy" can have many different meanings depending on what is happening with the company. A new accounting regime may need to be instituted when a change takes place. Looking at the most recent historical information is one way to determine the relevancy of the accounting information. The analyst needs…
Cadwalader, Wickersham, & Tact LLP. 1999. Application of the Safe Harbor for Forward-
Looking Statements. Findlaw. Accessed April 23, 2009
Giroux, G. (n.d.). American Big Business and Cost Accounting. In a Short History of Accounting and Business. Accessed April 23, 2009
Accounting Case Study
Legal Plan Services
What type of product is Legal Plan Services selling? Tangible or intangible? What type of benefits does the client receive for his membership?
The kind of products that Legal Plan Services is selling is legal representation for civil litigation. The way the company's approach works is to provide customers with access to some of the top law firms for purchasing a membership. The services are considered to be intangible because this is not something that can be physically held. The benefits that the client receives are the ability to consult with any one of the attorneys from affiliate firms for free. This involves select cases including: personal injury, tax, criminal and civil related issues. If the client goes beyond a certain amount of hours is when the membership will provide a 25% discount on the firm's hourly rate. ("Intangible")
What accounting concepts, objectives, and…
"Generally Accepted Accounting Principles." CPA Needed, 2011. Web. 3 Feb. 2012.
"Intangible." The Free Dictionary, 2012. Web. 3 Feb. 2012
"Pro Forma." Investopedia, 2012. Web. 3 Feb. 2012
Briner, Russell. "Revenue Recognition." CPA Journal, 2001. Web. 3 Feb. 2012.
ystems of income and financial position would superimpose standards of normalization upon everyone within the firm. Accounting, thereby, had achieved Foucault's definition of knowledge as power over people per excellence. By the 1950s, however, person as decision-maker replaced this vision of person as machine, and accounting still has power in our society, but a different sort of power. Likewise, accounting still possesses its constructivism (i.e. manner of perceiving a certain stranglehold on reality by emphasizing certain construct and demoting others), although its constructivist paradigm may have differed from that of, say, a century ago. Individuals are viewed, measured, and criticized within programmatic frameworks, and Miller and O'Leary (1987) suggest that accounting today can still be viewed as part of the heritage and structure (albeit slightly changed) of the traditional mode of power that it was in the early decades of this century. In other words, the slanted domination of accounting…
Armstrong, P. 2002, "Management, Image and Management Accounting. Critical Perspectives on Accounting, 13, pp. 281-295
Bryer, R. 2006, "Accounting and control of the labour process" Critical Perspectives on Accounting, 17, pp 551-598.
Chwastiak, M. & Young, J.J. 2005, "Silences in Annual Reports, Critical Perspectives on Accounting, 14, 533- 552
Ezzamel, M., Lilley, S. & Willmott, H. 2004, "Accounting representation and the road to commercial salvation." Accounting, Organizations and Society, 29, pp. 783- 813.
As, the Delphi methodology will help us to determine the various opinions of the experts. While qualitative research will organize these views and allow us to study different aspects of the problem. This is the point that we will be taking a more balanced approach in dealing with these issues. (What is Qualitative Research 2010)
The purpose of this study will help us to understand specific factors. That are affecting why so many businesses, are opposed to implementation of IFRS standards. Once this takes place, we will then look at possible solutions for addressing these issues and what steps can be taken to increase compliance. These elements are important, because the combination of them will help us to understand all aspects of the problem. This is the point that we will have a full comprehension of the issues and the challenges associated with implementing any kind of changes.…
Delphi Method, 2011, Business Dictionary. Available from: [29 September 2011]
The Path to IFRS Conversion, 2010, Deloitte and Touche.
Summaries of International Reporting Standards, 2011, Deloitte. Available from: [29 September 2011].
What is Qualitative Research, 2011, QSR International. Available from: [29 September 2011]
It also publishes interpretations about certain rules.
WHEN AN ACCOUNTANT FAILS
The AICPA's Code of Professional Conduct is considered to be a binding agreement for every CPA in America.
As with other professions most accountants are ethical and honest in their dealings with their clients, however every so often a problem arises that must be disciplined. This can happen in a purposeful attempt to be deceitful, or it can happen by an error in judgment or an error in practice. egardless of how or why it happened a review is called for and a sanction or discipline course of action is decided upon (Badawi, 2002).
Most of the violations that occur are ethical dilemmas that are relatively easy to solve but some of the problems become quite in depth and resolution is more difficult to reach.
A study of conduct violations in a ten-year period produced the following result.
Badawi, Ibrahim M.(2002) Accounting codes of conduct, violations and disciplinary actions. Review of Business; 1/1/2002;
Carey, J.L. The CPA Plans for the Future. New York, NY: AICPA, 1965.
Demski, J.S. And J. L Zimmerman.(2000) "On Research vs. Teaching: A Long-Term Perspective." Accounting Horizons
accounting questions while the rest centers on the characteristics of two certain companies, those being Apple and Philips.
Accounting Questions & Answers
The first accounting question is why revenue recognition is a significant issue. ecognizing when revenue comes in, what specific revenue stems from and the exact amount of all of the above is a very vital part of the accounting process because it has a direct correlation and effect on the profit/loss of a company, the income statement, the cash flow statement and, to a lesser extent, the balance sheet. evenues are used to defray the costs of the goods/services that were disseminated and they need to be properly measured and accounted for, and in the time period to which they apply, so as to ensure that all of the affected and relevant financial statements reflect what is truly going on and when precisely it happens (McQuaig & Bille,…
Apple. (2012, December 6). Apple Inc. - Overview. Apple Inc. - Overview. Retrieved December 6, 2012, from http://investor.apple.com/
McQuaig, D.J., & Bille, P.A. (2008). College accounting (9th ed.). Boston: Houghton Mifflin.
Philips. (2012, December 6). Philips Investor Info. Philips Electronics. Retrieved December 6, 2012, from www.philips.com/about/investor/index.html
Yahoo Finance. (2012, December 6). Yahoo! Finance - Business Finance, Stock Market, Quotes, News. Yahoo! Finance - Business Finance, Stock Market, Quotes, News. Retrieved December 6, 2012, from http://finance.yahoo.com
ccounting CP. Ideas 1- My story: I a young, my father gave responsibility manage budget house. School I control budget Volunteer
Personal statement: Why I want to obtain an MSc in ccounting
Ever since I was young, I have had the responsibility of balancing a budget. My father encouraged me to manage some of the household finances, and by the time I was selected in school to oversee the treasury of the volunteer club, I felt very comfortable and confident with bookkeeping. Majoring in accounting when I went to college seemed like a natural extension of my interests and aptitudes. I graduated with a B.. In accounting from King Saud University in 2009. However, even then I knew that obtaining a B.. was only the first step in gaining mastery of the profession. I already knew I wanted to go on to get my MSc in ccounting but decided to…
After graduating, I obtained a job at the Saudi Arabian Monetary Agency, where I am currently employed. I am charged with supervising the Agency's financial statements and the accounting details of insurance companies. My work has enabled me to put my academic knowledge into practice, and has been a constant, daily education in the need for rigor, efficiency, and wide and deep knowledge of international accounting standards and ethics. But like all positive experiences, my work life has also showed me what I do not know about the accounting field. I wish to gain a broader and more flexible skill set to be better able to cope with the demands of the profession. The profession is changing at a rapid rate. I have been amazed how quickly my nation and the world have evolved in terms of accounting standards and ethics since 2009.
My work experience whetted my appetite for more knowledge about the field of accounting. I have come to better understand the different ways in which modern global business demands new forms of accounting and monitoring business processes. Government regulations are constantly changing regarding how financial statements must be prepared, as are the needs of businesses in the new global economy. Accountants must meet these challenges head-on, and obtaining my MSc would better equip me to do so. Becoming a part of a formal MSc program would also connect me with a network of fellow professions, whose diverse work experiences would instruct me.
I have chosen to purse an MSc in Accounting at University which emphasizes team-based learning and will offer a flexible curriculum so I can tailor my education to my needs. I believe that I have enough experience to know how to guide my education, while supported by the outstanding faculty of the school. Because of my experiences I am confident I would be an asset to any classroom. I would be able to offer my knowledge to support what was being taught in class with real-life experiences. After obtaining my MSc, I intend to become a CPA and open my own business. Obtaining an MSc would give me the knowledge and platform to act independently as an accountant and to serve in my profession to the maximum extent of my abilities. Much as I have enjoyed working for a government agency, I believe it is in private practice where my full ambitions can be realized. My MSc would thus also give me a needed grounding in managerial theory that I would require to manage my own office of fellow accounting professionals.
Accounting includes recording, summarizing, and reporting of the economic activities and events of an organization. It is pertinent in business decision-making and the management and control of operations. The financial statements reported by a company include the income statement, balance sheet, statement of retained earnings and statement of cash flows. Globally, there are two sets of accounting standards, the Generally Accepted Accounting Principles (GAAP) and International Financial Reporting Standards (IFRS). In particular, the GAAP are more often than not employed in the United States whereas IFRS are more often than not employed in Europe and international expanses. IFRS are regarded as being more principles-based and U.S. GAAP as being more rules-based. The establishments responsible for setting the IFRS and GAAP are the International Accounting Standards Board (IASB) and Financial Accounting Standards Board (FASB) respectively (Gaspar et al., 2016). The purpose of this paper is to discuss the difference between GAAP…
A transaction between Company M. And Company W. has caused some serious accounting problems and a complex legal scheme and law set is necessary to figure out how to resolve this issue. Company M. And Company W. have been tied up in a long and drawn out legal battle over some copyright and patent infringement argument. In May 2007, W filed a claim against M. And a verdict was reached in September of 2009. This jury found that M. must pay W $18.5 for their mistakes. M did not like this and called for an appeal in November of 2009. More than one year later, the appeals court ruled in favor of M. And the jury's verdict was overturned. W was still upset and filed a petition for a rehearing the next month. That request for appeal was denied and the matter was over according to all legal…
Financial Accounting Standards Board. "Accounting Standards Codification." Viewed 17 Sep 2013. Retrieved from https://asc.fasb.org/section&trid=2127165&analyticsAssetName=subtopic_page_section &nav_type=subtopic_page
Nilsen, K. (2011). Renewed Focus on Loss Contingency Disclosures. Journal of Accountancy April 2011. Retrieved from http://www.journalofaccountancy.com/Issues/2011/Apr/20113854.htm
1. How should the $25 Referral Credit be recorded in Runway's income statement?
In accordance to ASC 605-50-45 Revenue Recognition, a cash consideration handed to a consumer by a vendor or retailer is deemed a decrease in the selling prices of the products or services retailed. This would imply that these cash considerations would be deemed as an expense and a decline in the revenue to be generated by the vendor. Nonetheless, the cash consideration can be deemed as an expense if it solely meets two requirements. First, the cash consideration has to give rise to an identifiable benefit that is separable from the purchase of the recipient, in the sense that the vendor could have achieved the benefit through a third party, and not the purchaser. Secondly, the value that is provided has to be reasonably approximated by the vendor (IAS Plus, 2016).
In this case, Runway does meet…
FASB Accounting Case
New Standards for Capital Leases
Case Overview and Key Issues
Sable., a company located in San Fransico, CA, specializes in the manufacturing of heavy equipment and have different financing options for clients to own or lease the heavy equipment that they produce. The first option is to purchase the machinery in a traditional standard sale for a lump sum price of $135,000 in which the customers purchases the equipment outright. Another option is for a client to lease the equipment for a period of ten years and pay the lease payment on an annual basis. Sable has been charging $16,000 annually each year to lease the equipment during the ten-year period. However, both options are being effected by the economic conditions that loom in the external environment and some of the company's competitors are reducing their fees for similar equipment options and charging an average of $125,000.…
.....ethical for an employer to use social media information as a factor when considering whether to hire an employee? What about monitoring social networking activities of employees while on the job? Use ethical reasoning in answering these questions.
The wide-ranging use of social media in the workplace gives rise to serious moral and ethical concerns. Kantian ethics lays emphasis on the form of an action in ascertaining its morality. Kant insists on the Categorical Imperative. Kant implies that this ethical principle is the superlative and outright and proper test to morality, whereas imperative implies that from time to time one must command oneself to be moral and undertake the right thing, even and particularly when one's self-centeredness may be infringed by acting ethically (Mintz, 2015). As an overall moral rule, for an employer to impose into an employee's private life on social media devoid of consent or in a clandestine…
How should the $25 Referral Credit be recorded in Runway's income statement?
In accordance to ASC 605-50-45 Revenue Recognition, a cash consideration handed to a consumer by a vendor or retailer is deemed a decrease in the selling prices of the products or services retailed. This would imply that these cash considerations would be deemed as an expense and a decline in the revenue to be generated by the vendor. Nonetheless, the cash consideration can be deemed as an expense if it solely meets two requirements. First, the cash consideration has to give rise to an identifiable benefit that is separable from the purchase of the recipient, in the sense that the vendor could have achieved the benefit through a third party, and not the purchaser. Secondly, the value that is provided has to be reasonably approximated by the vendor (IAS Plus, 2016).
In this case, Runway does meet these…
validity of establishing Section 115 by the FASB. It has 4 sources.
The FASB (Financial Accounting Standards Board) in the recent years have revised many accounting standards and policies to effectively govern corporations for the benefit of the public. In its attempt to curtail the unaccounted for incomes and earnings, the FASB issued the FASB No.115 section in which it states that companies reporting their financials can determine their investment securities as held-to-maturity, available-for-sale or trading. In differentiating the categorization of the securities, the FASB establishes the securities either as an income statement item or a balance sheet item. The gains or loss derived from either of the categorization is considered to be different in their nature in reportage as well as in their taxation. The need for differentiation stemmed from FASB's justification that investment accounting of debt and equity are often subjected to taxation. Items of financial statements come…
Financial Accounting Standards Board. Edited by Dr. Howard M. Felt. Temple University, 2000.
Campbell, Tim and Kracaw, Will A. Financial Risk Management: Fixed Income and Foreign Exchange. Harper Collins, New York 1993.
Leahigh, David J. A Pocket Guide to Finance. Dryden Press, Harcourt Brace & Company 1996.
Marshall, John F. And Bansal, Vipul K. Financial Engineering, 2nd Edition, Kolb Publishing Co. FL 1993.
Accounting information can be used by business owners to carry out a financial analysis of the businesses and their operations. The use of this information for such function is attributed to the fact that it usually contains quantitative and qualitative characteristics. While quantitative characteristics are the calculations of financial transactions while qualitative characteristics can be described as the business owner's apparent significance of financial information. In essence, qualitative characteristics of financial information are attributes that contribute to the usefulness of information provided in financial statements. Since these qualities can sometimes be at odds with each other, they need to be balanced against each other. In addition, these qualities are essential in decision making because they provide the basis for assessing businesses and the effectiveness of their operations.
Fundamental Qualitative Characteristics:
As previously mentioned, qualitative characteristics in accounting are attributes that result in the usefulness of provided financial information by users.…
Spiceland, J.D., Sepe, J.F. & Tomassini, L.A. (2007). Intermediate accounting (4th ed.).
Retrieved February 20, 2014, from http://highered.mcgraw-hill.com/sites/0072994029/student_view0/ebook/chapter1/chbody1/qualitative_characteristics_of_accounting_information.html
Vitez, O. (n.d.). Qualitative Characteristics of Accounting Information. Retrieved February 20,
2014, from http://smallbusiness.chron.com/qualitative-characteristics-accounting-information-3952.html
Accounting Information System
The following plan details the business areas and services to be provided for a growing homeowners' association by a certified accounting firm. The large growth in size of the association is cited as a need for this contracting with the accounting firm, and the specific business areas in need of servicing are identified as billing, collections, payments, reporting, taxes, and miscellaneous advisory duties. Input, output, and control requirements are listed in brief for each business area, with reference to current scholarly and regulatory/advisory information to ensure consistency and conformity with accounting standards. Automation of accounting processes is a major focus of the service provision, and levels of automation are fully discussed, with the decision to build an in-house automation system and certain automation challenges discussed.
The homeowner's association is facing a problem of a major increase in the amount of accounting work it will…
AICPA. (20110. AICPA Publishes New Attest Guidance for Reporting on Controls at a Service Organization. Accessed 30 October 2011. http://www.aicpa.org/press/pressreleases/2011/pages/aicpapublishesnewattestguidanceforreportingoncontrolsataserviceorganization.aspx
COSO. (2009). Guidance on Monitoring Internal Control Systems. Durham, NC: COSO.
Kruck, S. (2011). The emergence of accounting information systems programs. Accessed 30 October 2011. http://www.allbusiness.com/accounting/3504565-1.html
Romney, M. & Steinbart, P. (2011). Accounting Information Systems. New York: Prentice Hall.
International Accounting and Auditing Standards
International public sector accounting standards (IPSAS) are developed and put forth by the International Public Sector Accounting Standards Board of the International Federation of Accountants (IFAC). International private sector accounting standards are known as International Financial Reporting Standards (IFRS). They are put together and put forth by the International Accounting Standards Board (IASB), a self-governing standard generating body of the International Accounting Standards Committee Foundation. The IFRS for SME's is a self enclosed standard, intended to meet the requirements and abilities of small and medium-sized entities (SME's), which are anticipated to comprise over ninety five per cent of all corporations worldwide. It is constructed on the basis of full IFRSs, yet, a lot of the principles for distinguishing and gauging assets, liabilities, earnings and expenses have been cut down, subjects not relevant to SME's have been left out, and the amount of necessary revelations…
Barth, Mary E. "Global Financial Reporting: Implications for U.S. Academics." Accounting
Review 83.5 (2008): 1159-1179. Business Source Premier. EBSCO. Web. 6 July 2011.
Hail, Luzi, Christian Leuz, and Peter Wysocki. "Global Accounting Convergence and the Potential Adoption of IFRS by the U.S. (Part II): Political Factors and Future Scenarios
for U.S. Accounting Standards." Accounting Horizons 24.4 (2010): 567-588. Business
One of the most important disciplines in the corporate world is accounting since it is applicable to nearly all job specialties. Accounting is important in the business world because of the significance of effective record keeping in enabling a business organization to survive efficiently and achieve productivity. Therefore, accounting is a discipline or field that needs to be understood by various stakeholders in the business world. The main function of accounting in business is to ensure various transactions are recorded i.e. incoming and outgoing transactions that are related with the company's operations.
Generally, accounting is the most foundational framework of a business organization because of its link to the daily operations of the organization ("The Importance of Accounting in Today's World," n.d.). Accounting is important for three major reasons including the fact that it acts as the language of business since it is related to the interpretation of a…
"Financial Ratio Analysis." (n.d.). Demonstrating Value. Retrieved March 27, 2015, from http://www.demonstratingvalue.org/resources/financial-ratio-analysis
"The Importance of Accounting in Today's World." (n.d.). Fisher College of Business. Retrieved from The Ohio State University website:
Accounting for Partnerships
Partnership is a legal business relationship between two or more people who agree to do business for the purposes of earning profit. It is considered as the most appealing option in setting up a new small scale business and growing it with the passage of time. In this business relationship, all the partners share profits and losses in an agreed ratio while assign the decision making powers to the partners who are more competent and experienced than the rest (Needles, Powers, & Crosson, 2011).
The creation, operations, and liquidation processes of a partnership firm are quite different than those of a sole proprietorship or a joint stock corporation. Therefore, it has its own advantages and disadvantages that must be kept in mind while partners choose to engage together and share profits and liabilities.
The following sections discuss all the major aspects of a business partnership;…
Clifford, D., & Warner, R.E. (2008). Form a Partnership: The Complete Legal Guide. 8th Edition. Berkeley, CA: Nolo
Emerson, R.W. (2009). Business Law. 5th Edition. Hauppauge, N.Y: Barron's Publishers
Li, J., & Wolfstetter, E. (2010). Partnership dissolution, complementarity, and investment incentives, Oxford Economic Paper, 62 (3): 529-552.
Needles, B.E., Powers, M., & Crosson, S.V. (2011). Principles of Accounting. 11th Edition. Mason: Cengage Learning
The Affordable Care Act (a.ka. Obamacare) has created some interesting implications for financial reporting. The issues revolve around the determination of benefits, particularly when companies opt to put their employees through Obamacare insurance exchanges where they had previously been on a company plan. The Affordable Care Act was signed into law in 2010, and reshaped the health care insurance industry in particular. With the creation of health care insurance exchanges, competition in health insurance was increased and some of the information asymmetry in the health care market decreased -- though not nearly enough for the market to be considered competitive.
One of the implications for accountants of the Affordable Care Act is that many employers have taken the opportunity to move their employees off of employer-sponsored plans and onto the exchanges as a means of reducing the cost of their benefits programs. As the ACA implementation process accelerates, the…
CalCPA. (2014). ACA mythbuster. California CPA Education Foundation. Retrieved May 2, 2014 from http://www.calcpa.org/content/27238.aspx
FASB (2010). Contingencies (Topic 450). Financial Accounting Standards Board. Retrieved May 2, 2014 from http://www.fasb.org/cs/BlobServer?blobkey=id&blobnocache=true&blobwhere=1175823559187&blobheader=application%2Fpdf&blobheadername2=Content-Length&blobheadername1=Content-Disposition&blobheadervalue2=309726&blobheadervalue1=filename%3DProposed_ASU_Contingencies_Topic_450_Disclosure_of_Certain_Loss_Contingencies.pdf&blobcol=urldata&blobtable=MungoBlobs
FASB Summary of Statement No. 158. Financial Accounting Standards Board. Retrieved http://www.fasb.org/summary/stsum158.shtml
Kastrup, L. (2013). Financial reporting implications under the Affordable Care Act. American Academy of Actuaries. Retrieved May 2, 2014 from http://www.actuary.org/files/HPFRC_White_Paper_on_ACA_and_FR_final_062513.pdf
The role of financial statements in investing is that they provide a consistent format that can be used by potential investors and other stakeholders to evaluate a company. There are several components that facilitate this happening. For publicly-traded firms, Generally Accepted Accounting Principles (GAAP) play a key role in the creation of financial statements. GAAP is a common set of accounting principles and procedures that companies use to compile their financial statements (Investopedia, 2012). ith companies having to produce their statements according to a common set of criteria, the information is easier to compare not only between different years at the same company, but also against other firms in the industry and all other publicly-traded firms.
The IFRS is essentially the international version of GAAP. Financial statements in many countries, especially those in Europe, are produced according to IFRS. There are a many areas where GAAP and IFRS diverge,…
AICPA. (2011). International financial reporting standards (IFRS): An AICPA backgrounder. AICPA. Retrieved March 22, 2012 from http://www.ifrs.com/pdf/IFRSUpdate_V8.pdf
Beiersdorf 2011 Annual Report. Retrieved March 22, 2012 from http://www.beiersdorf.com/GetFile.ashx?id=3243
Investopedia (2012). Generally Accepted Accounting Principles (GAAP). Investopedia. Retrieved March 22, 2012 from http://www.investopedia.com/terms/g/gaap.asp#axzz1pmKm2c8C
Revlon Fiscal Year 2011 Form 10-K. Retrieved March 22, 2012 from http://services.corporate-ir.net/SEC/Document.Service?id=P3VybD1odHRwOi8vaXIuaW50Lndlc3RsYXdidXNpbmVzcy5jb20vZG9jdW1lbnQvdjEvMDAwMTE5MzEyNS0xMi0wNjUzMTAvZG9jL1JldmxvbkluYy5wZGYmdHlwZT0yJmZuPVJldmxvbkluYy5wZGY=
Accounting, by its nature, requires a set of standards that are exactly the same industry-wide. If there were not established rules for determining revenues, profits, expenses, and other influences on a company's bottom line, there would be no way to evaluate a corporation's effectivity, production, or potential. A lack of established standards would also mean that no two companies could be honestly compared, since their accounting methods could be so significantly different that their financial statements showed vastly different accounting methods.
In light of these potential discrepancies in reporting methods, the bodies that govern accounting have established Generally Accepted Auditing Standards, or GAAS. Generally These principles are required to be applied in all accounting situations, and they are extensive enough so that almost every possible scenario has a standard response. Interest owed in Houston is reflected on a financial statement in the exact same way that interest owed in New…
This discussion contains research pertaining to the impact of cash-basis accounting on the distortion of the financial position and operating results of a business.
We began our discussion with a definition of cash base analysis. We concluded that this accounting tactic is used to examine cash and cash equivalents. This is done by separating cash flow transaction into one of three activities which include; operating, financing and investing activities.
Our investigation then explored why and how financial statements completed using cash-basis accounting can be distorted to present a misleading picture about the financial position and operating results of a company. Our investigation found that these distortions exist when accountants fail to provide a report of additional information that may not appear on the face of the financial statement. Additionally, we found that inconsistencies in the presentation of a financial statement can greatly influence the distortion of information that is…
Financial Reporting under the Cash Basis of Accounting (2000) Standards Report International Federation of Accountants.
Live on the Lakeshore Financial Statements. (2003) Retrieved August 19, 2003 at http://aliveonthelakeshore.gospelcom.net/aotlfinancial03.pdf.
Navani, Vinay S. (2002) IRS eases cash-accounting rules for small businesses
Journal of Accountancy, Vol. 193
The Statement of Owners' Equity
The statement of owner's or shareholders' equity is designed to show the components of the change in equity from the end of one fiscal year to the next. Beginning with the amount of equity shown at the end of the previous fiscal year, net income is added and cash dividends paid to the owners are subtracted. If owners contributed any additional capitol this amount (such as the sale of new shares) it is added to the equity. On the other hand, if the owners withdrew capitol, equity declines. All the additions and subtractions, taken together, equal the changes in owner equity from one fiscal year to the next (Kurtz, 2010).
The Statement of Cash Flows
Public companies are required to prepare and publish a statement of cash flows. This statement provides investors and creditors with relevant information about a firm's cash receipts and cash payments…
Kurtz, D.L. (2010). Contemporary Business, 13th ed. Hoboken, NJ: John Wiley & Sons Inc.
"The Four Financial Statements" (NDI). The four financial statements. QuickMBA. Retrieved July 24, 2011, from http://www.quickmba.com/accounting/fin/statements/
Accounting Fundamentals for ealthcare Management
This paper examines governmental and nonprofit accounting and discusses how it differs from commercial accounting. In the accounting field, there may not always be a clear distinction between the three types of organizations. The dividing line between business and nonbusiness organizations may depend on the incidence and relative importance of the nonbusiness characteristics found in an entity. The funds of such organizations are usually earmarked for specific purposes and must be used in accordance with laws, regulations, or contractual requirements.
One distinction of nonbusiness organizations is that they generally have no single indicator of performance, such as profit or net income. FASB:CS-4 provides two performance indicators for financial reporting for nonbusiness organizations:
They provide information about the nature and relationship between inflows and outflows of resources.
They provide information about service efforts and accomplishments.
FASB: CS-4 also sets forth the distinctive features of the nonbusiness…
Horowitz, K.J. (2006, February 26). State and Local Government Accounting Principles. Retrieved on Aril 15, 2011 from Mercer County Community College website: http://www.mccc.edu/~horowitk/documents/Chapter02D.pdf
Ruppel, W. (2010). Governmental Accounting Made Easy. Hoboken, New Jersey: John Wiley & Sons, Inc.
Siegel, J.G., & Shim, J.K. (2006). Barron's Accounting Handbook (4th ed.). Hauppage, New York: Barron's Educational Series.
Accounting and Intrusion Detection
In a report issued by Paladin Technologies, Inc., entitled: "Security Metrics: Providing Cost Justification for Security Projects," 273 organizations were surveyed on the topic of security. The report illustrates in quantifiable terms the depth and reach of intrusion detection on the financial viability of the organization. The combined reported losses from the firms surveyed totaled $265.6 million in 1999. The highest loss categories were reported as follows:
Type of Loss
Estimated Dollar Value
Number of espondents
Theft of intellectual capital
The average annual financial loss of firms surveyed was estimated at $40 million. Forty three percent of respondents were able to quantify financial losses, and seventy four percent were able to acknowledge financial loss. Ninety percent detected cyber attacks within the most recent twelve-month period and seventy percent reported serious breaches other than viruses, laptop theft, and employee abuse of…
Risk Assessment risk assessment involves estimating the likelihood and severity of an occurrence, the relative impact of risk on the facility, information handler, processing, support, and the mission of the organization. Assessing the likelihood means determining the probability that existing controls will be skirted. Pfleeger has identified a series of steps for examining the likelihood of adverse occurrences:
Calculate the probability that the risk may happen, found in the observed data for the specific system.
Estimate the likely number occurrences in a given time period. The analyst gives a rating based on several different risk analysis methodologies, and then creates a table to hold and compare the ratings.
The Delphi approach: several raters individually estimate the probable likelihood of an event, combine their estimates, and choose the best one.
Does Coca-Cola have the ability to influence CCE's debt levels?
The debt to equity ratio of Coca Cola is: .92 for 2009 and 1.33 for 2010. While CCE has a debt to equity ratio of: 1.51 for 2009 and 1.3 for 2010. Coca Cola does have the ability to influence the debt levels of CCE. The way that this can take place is to use Coca Cola's credit line to help the firm raise additional working capital in the public markets. This would cause the debt levels of CCE to increase. Another option is that Coca Cola can purchase CCE and assume a percentage of their debt. A good example of this can be seen with Coca Cola's acquisition of CCE North America. In exchange for increasing their ownership in this segment, there was also an agreement for Coca Cola to take on CCE North America's debt of $7.9 billion.…
2010 Annual Report. (2011). The Coca Cola Company. Retrieved from: http://www.thecoca-colacompany.com/investors/pdfs/form_10K_2010.pdf
Kothari, S. (2010). Implications for GAAP. Journal of Accounting and Economics, 2 (3), 246 -- 286.
The proper authorization to complete an inventory also needs to include training on how to manage the exceptions that often occur when physical counting is taking place (Corman, 1988).
The third principle to have adequate documents and records in place that can be quickly be used by the teams completing the audits. This also needs to be preceded with a training session focused on how to also manage exceptions to the paperwork as well, as each company's physical inventory processes are unique to their specific business models (andall, 1984).
The fourth and fifth principles are physical controls and independent checks on performance. These two principles need to anchor all training activity and also be continually audited to ensure performance to standards set over decades are attained. Physical controls and independent checks are also indispensable to the audit and final approval of physical inventory levels, which is the first step in…
Corman, T.R. (1988). Inventory management. Hospital Materiel Management Quarterly, 10(2), 5-5.
Giannoccaro, I., & Pontrandolfo, P. (2002). Inventory management in supply chains: A reinforcement learning approach. International Journal of Production Economics, 78(2), 153-161.
Howard, K. (1984). Inventory management in practice. International Journal of Physical Distribution & Logistics Management, 14(2), 3-3.
Randall, a.M. (1984). Computerized inventory management: A return to basics. Hospital Materiel Management Quarterly, 5(3), 12-12.
(5) Auditors and CPAs should consider several ways that the Sarbanes-Oxley Act and SEC implementation rules as a whole impact accountants and work closely with regulators to address these effects. (6) Public accounting firms need to reconsider external auditors' participation with their client's internal audit function and control structure. This reporting on the internal controls can be very useful and add value to the integrity and quality of the financial reporting process. However, management accepts full responsibility for the design and maintenance of the adequate and effective internal control system. (7) Auditors should advise their clients and make recommendations for the appropriate disclosures of financial information. A more timely, relevant, objective, and transparent financial reporting process should improve the quality, integrity, and reliability. (8) it is necessary to use more effective and objective audit procedures and related standards to improve audit efficiency. The role of independent auditors on financial statements…
Journal of Accountancy. 199(2) p. 74-75.
Rezaee, Z. (2004) Restoring public trust in the accounting profession by developing anti- fraud education, programs, and auditing Managerial Auditing Journal. 19(1): 134-148
Walker, D.M. (2005) Reclaiming public trust in the wake of recent corporate accountability failures International Journal of Disclosure and Governance 2(3):.. 264-271-279
Then again, even the sites that allow for such commentary often don't receive any. PwC IFS hasn't received any comments in the past month on any of its articles, for instance, though it does provide accurate and fairly up-to-date information. Part of the reason for this could be the fact that this blog, like many others in the accounting world, are run by large firms -- Price Waterhouse Coopers, in this case. Though this does not mean there is necessarily a bias at work in the blog, and indeed certain differing opinions are allowed, the fact that the information on such blogs is so directly under the control of a single for-profit entity means it must be regarded as at least slightly suspect. As these resources are also free, however, there is no harm in regularly browsing them.
Accounting and Business esearch. Accessed via EBSCO 8 October 2009.
Accounting and Business Research. Accessed via EBSCO 8 October 2009.
Accounting Historian's Journal. Accessed via EBSCO 8 October 2009.
Accounting and the Public Interest. Accessed via EBSCO 8 October 2009.
Accounting Today. Daily print periodical. 2009 issues reviewed.
Accounting for Postretirement Health Care and Life Insurance Benefits necessitates disclosures regarding an employer's accounting. These include a delineation of the provision of benefits and the groups of employees given coverage, a delineation of the employer's prevailing accounting and financing policies for such benefits and lastly the cost of such benefits acknowledged for the period. In particular, this is effective for the financial statements prepared by organizations for the financial period ending subsequent to December 15, 1984 with respect to postretirement health care and life insurance benefits that are provided not only in the United States but also international nations. Nonetheless, for financial periods prior to June 15, 1985 that lack data and information regarding benefits provided in foreign nations, it is not mandatory to include them (FASB, 2017).
Moreover, the net pension liability or net pension assets have to be included in the financial statements as an asset or…
ABC Overall risk profile
The ABC Company may face series of risks based on the current industry and economic issues. First, the company is operating in a competitive market environment making the company to face a fierce competition from other companies producing similar products. Thus, the ABC Company may likely to lose some of its customer to competitors if the price per product is too high.
Moreover, the current recession may affect the purchasing power of customer, which may affect the company annual revenue. Moreover, inflation is likely to increase the cost of production. Another risk issue is that the company should satisfy its shareholders by declaring high dividends and failure to satisfy the shareholder may make some shareholders to disinvest their fund from the company, which may make the company to lose the public image. (Daniel, Njikizana, . & Chamboko, 2011).
Current ABC cash flow using Direct…
Bragg, S.M. (2011). The Controller's Function: The Work of the Managerial Accountant, (Fourth Edition) UK. Wiley .
Daniel, B.M. Njikizana, C.T. & Chamboko, R. (2011). Interpretation and Application of International Financial Reporting Standards.UK. Wiley.
An unaware analyst may think the second company to be better but in reality its low encouraging level is due to the fact that it is unable to secure additional funding. The companies may possess different capital structures and to attempt comparison of performance when one is all equity financed and another is a geared company may not suffice for a good analysis. The chosen application of government incentives to several companies may also twist the inter-company evaluation. There may be the possibility of providing a company with the tax holiday while the other within the same line of business not, and evaluation of such two enterprises may be misleading. (Session 15: Limitation of atio Analysis)
As a matter of principle, the accounting strategies are required to be applied persistently. Changes are required to be emphasized and the influence of variations from an original policy revealed. This is applicable when…
Accounting and decision making - Ratio analysis. Retrieved from http://www.learn.co.uk/cima-mc/lesson4/page4.htm Accessed on 22 April, 2005
Basic Financial Statement Analysis: Objective 3: Explain the limitations of ratio analysis. Retrieved from http://www.wu-wien.ac.at/usr/h93/h9352467/Limitations%20on%20Ratio%20Analysis/limitationonra.html Accessed on 22 April, 2005
Cars, Andreas. 2002. The Dynamic Current Ratio. 3 September. Retrieved from http://www.investopedia.com/articles/02/090302.asp Accessed on 22 April, 2005
Covers Information from Accounting 200 and 201. Retrieved from http://www.everettcc.edu/emplibrary/Financial%20Ratios.pdf Accessed on 22 April, 2005
Accounting and Finance
Henkel AG is a multinational company focusing its brand and technologies in three business areas that include Beauty Care, Laundry & Home Care and Adhesive Technologies. Established in 1976, the company holds its global market positions in both the consumer and industrial products with well-known brands that include Lactate, Persil, and Schwarzkopf. Henkel's headquarter is in Dusseldorf in German and the company has over 47,000 employees globally. Typically, the company is considered among the most "internationally aligned German-based companies in the global marketplace." (Henkel 2012).
Objective of this paper is to use various financial models to carry out financial analysis and valuation of financial Henkel AG.
One of the methods to carry out the valuation of a company is to use enterprises discounted cash flow (DCF). The DCF could be carried out using WACC (weighted average cost of capital) that represents the opportunity costs that…
Accounting Information for Decision Making
Corporate Confirming on Water isk (Feb 2010) indicates that the Global Confirming Initiative (GI) G3 Guidelines' five water-related indications (total withdrawal volume by source, ponds considerably impacted by distributions, percentage and total amount of water recycled and used again, total water discharge by quality and destination, and identification water physiques and related habitats impacted by discharges) make the perfect beginning point for assessing and confirming water risks. Within this section, we'll briefly discuss the relevance of all these standards (Power, 2010).
Total water withdrawal by source
Confirming the entire amount of water withdrawn by source adds for knowledge of the general scale of possible influences and threats connected using the company's water use. The entire volume withdrawn offers an indication from the organization's proper size and significance as a user of water and offers to set up a baseline figure for other information relevant to…
GRI, (Global Reporting Initiative). (2006) Sustainability Reporting Guidelines. Version 3.0, Accessed on September 27, 2012 from: www.globalreporting.org/NR/rdonlyres/ED9E9B36-AB54-4DE1-BFF2-5F735235CA44/0/G3_GuidelinesENU.pdf
Power, G. Paddling Upstream - Approaches to Corporate Water Reporting. Business and the Environment, 21. 6 (Jun 2010): 1-3.