Accounting Analysis On Accounting Standards

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Accounting regulation is a complete set of theories that identified the economic, social and political factors that are related with the development of accounting principles and standards and to serve the best interest of societies. In 1930 and 1972 GAAP (Generally Accepted Accounting Principles) and SSAP2 were introduced to reduce the accounting scandal and control and regulate the accounting. Later in the year, FASB (Federal Accounting Standard Board) introduced conceptual framework to provide better understanding from rules, theories and principles in accounting. However, regulation in accounting is never neutral and different firm chooses different accounting rules and systems where it suits particular people for particular result that…show more content…
Furthermore, this statement stat there is no market value in accounting where everything is based on management’s opinion. Moreover, using the related articles, how managers judge and manipulate the financial statement will be elaborated in the following. This paper will critically evaluate how accountant creates the truth and how accounting present and represent the situation in limited way and manipulation will be supported by using statement and examples. Accounting represents reality and act for a construction of social reality. It can be said that the economic reality is subjective (Hines1991. P.316). Morgan also supports that accountants see themselves as involved in an objective representing reality but in fact they construct the reality. For Example, Morgan (1988, P.477) stat the artist painting of picture which represent the reality but in limited aspect of situation, Hines also clearly sees that accounting practices involves bias and errors that does not show exact amount and exact valuation of transaction. The part of financial accounting is to provide unbiased, impartial and stable information to the public. In addition, Hine suggests that it is clear that accounting rather than simply constructing the reality can also have real effect on the economy. The result of change in accounting rules and standards
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