Critical Review : Determination Of Accounting Standards

Positive Accounting Theory (PAT) aims to make good predictions of actual world events and convert them to accounting transactions. Its general objective is to understand and predict the choice of accounting policies across conflicting firms. It recognises that economic consequences exist. In relation to PAT, because there is a need to be efficient, the firm will want to minimise costs associated with the performance indicators used by the firm.

The field of accounting is constantly evolving. This is true not only for the theory of accounting itself but also the entities that govern its theory and practice. Presently, the Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB) are faced with some of the biggest challenges to date. To understand the significance of these two boards, it is necessary to understand their histories, relations between the boards, and the standards that they set. Also how the knowledge of these boards and the field they lead, gained through the masters of science in accountancy

To over view the knowledge we learnt from accounting theory and practice, the main thing I can conclude that is the tendency of accounting will shift away from technical way to people’s behaviour way. By understanding what should do, we should ask why and how we could improve and change it into a better way. This essay aims to explain how the theoretical material that we learn in lectures can be developed under a real practical manner.

Therefore, they require acceptance rather than mere adherence. The article presents individual principles which are applied to accounting: utilitarianism and deontological. Pros and cons of utilitarianism when applied to accounting, its influence in the business context in the sense that most economic and finance concepts are implicitly or explicitly built on the assumption that companies are interested in maximizing short-term self-interest. However, the accounting concepts are often presented as neutral or as morally correct, and accounting control has a moral quality (Preuss,

In the contemporary studies, it can be seen that the new accounting standard significantly impacts on profits of the firm. Simultaneously, the value of the firm is also affected by the new accounting standard. Secondly, when it is taken to account of the imposition of a particular accounting method, this imposition provides implications for the efficiency of the organization. This essay will clarify those two issues by using a Positive Accounting Theory perspective and examining a case study ‘Foster’s: less goodwill, higher earnings’.

Within a world driven by politics, many have discussed the impacts and consequences of accounting standards. The debate behind the creation of standards is a difficult topic. Should standards involve the bias of government and the people, or remain neutral from all influences? Many years ago accounting could have been considered non-political, but the ever-growing connection between public policy and business has placed pressures upon standard setters and the accounting community. The following paragraphs will debate if neutrality or politicization should be used to determine accounting standards.

Positive accounting theory refers to the branch of academic research in accounting[->0] that seeks to explain and predict actual accounting practices. These contrasts with normative accounting[->1] theory, that seeks to derive and prescribe "optimal" accounting standards. In other words, the accountant should to obey the standard accounting rules and regulation to prepare financial report and they must utilize optimal accounting standards. But in this film, lots of accountants prepare the misleading financial report, which make the potential investors and shareholders believe that companies still operate profitability, and on-going development. Actually, the companies already make huge

In conclusion, this essay discusses the reason of why accounting standard setting is a political process as well as the impact of lobbying on the setting process. Although the basic motive of regulation or implementing a standard is public interest which means that standard setting bodies wants to make financial documents more understandable, more comparable to the final users. Anybody can 't deny from this fact that process of regulation has forced the corporations to provide all the necessary information to the users which is really good for the users. But on the other way we have to accept this truth also those standard setting bodies sometimes play in the hands of powerful players of market. So finally there is a need to find out what can be changed on the trend of political lobbying with revolution in global market and information technology.

From 1904, some people suggest that we need a uniform accounting standard in the world. After the work hard in more than half century, in 1973, international accounting standard committee has been found. Although this is a non-government organization, they set up accounting standard for all the country, which is convenient to international trade, comparison, and analysis. With the increase of recognition, there are more countries used it, but many organizations and people disagreed the standard. This essay will focus on the different attitude of initial recognition methods of International Accounting Standard 16: Property, Plant, and Equipment and discuss the advantage and disadvantage of methods and influence the reason why IAS will allow

ABSTRACT The theorising in accounting prior to 1970 was rejected as not providing sufficiently general theories. Informed by theories in economics and finance (and other disciplines such as psychology) and with the aid of computers, attempts to theorise accounting took a new direction. Large data collection and analysis emphasized a purportedly more systematic empirical approach to developing theory. Key words: accounting; neo-empiricism;

“Profit” is the result of employing particular accounting rules and conventions, and many of them are contained within accounting standards (D &G, 2006). In this essay, I would like to discuss whether there is “true profit” under the pressure of accounting standards and profession which, in my opinion, play the most important role in shaping the nature of information. I will analyze this idea in the light of different prospective of the Normative Accounting theory (NAT).

Basu (1997) firstly quantified the accounting conservatism. According to the later literatures conducted by Pope and Walker (1999), Ball at al. (2000), Holthausen and Watts (2003) and Beaver and Ryan (2005), the accounting conservatism was approved to be existed. According to O’Hara et al. (2003), accounting conservatism can reduce opportunism and cost of equity and debt.

It has been become an issue of great concern that the accounting profession must find a common theory in order to address and put the issue at rest. This therefore, has called for the study of this topic under review “the demand for and supply of accounting theories: the market for excuses. As a result of this several questions have been raised. For instance, the question of why accounting theories are predominantly normative has been put forward by this article? Secondly, why no single theory in accounting profession that is generally or widely accepted? It has been argued that the financial accounting theories have been found to be ineffective most especially in the area of impacting accounting practice and policy, though, this has been

The principles are the result from the accounting practice that has been used and improved over the time. The deeper explanation about the statement is that, accounting standard such as IFRS is created based on the previous accounting practice itself rather the theories. The theories are useful in guiding the other field like finance and economics. There is also evidence that the accounting theory exists after standard has been practiced (Cluskey, Ehlen and Rivers 2007). The father of accounting, Luca Pacioli explained about double-entry booking in one of his studies. The study described the practice and explained to the readers the logic behind it. The research had given birth to dozens of studies made by theorist to further discuss about the accounting practice. By this evidence, the readers can also conclude that not only the standard that exist from accounting practice but in fact, accounting theory also exist to explain the nature of the practice. Back to the purpose of this paper, accounting theory plays no role in the setting of accounting standard is approved by two points: the process of setting accounting standard itself is a political activity and the development of accounting standard is influence by the existing accounting practice not accounting

It has been become an issue of great concern that the accounting profession must find a common theory in order to address and put the issue at rest. This therefore, has called for the study of this topic under review “the demand for and supply of accounting theories: the market for excuses. As a result of this several questions have been raised. For instance, the question of why accounting theories are predominantly normative has been put forward by this article? Secondly, why no single theory in accounting profession that is generally or widely accepted? It has been argued that the financial accounting theories have been found to be ineffective most especially in the area of impacting accounting practice and policy, though, this has been