Is Accounting Information Always Represent Fair And True Perspective?

1960 Words Dec 10th, 2014 8 Pages
Accounting is denoted as the language of business. There are two basic functions of accounting, one is the measurement of organizational activities and second is communication of these measurement with people in society. People in society need this information to make well informed decisions regarding companies in order to allocate resources (Williams et al., 2009). Furthermore, Mayer and Huinink (1990) argued that; in a society social entities (i.e. people/government/ creditors/ investors etc.) do not count only for number of people, but also deals with how these entities are connected with each other i.e. their interrelationship.
Since accounting has the ability to transmit information about organization, therefore; in order to smooth out interrelationship this information needs to be true (Carmichael & Graham, 2012; Istrate, 2012). Here, the question arises that is accounting information always represent fair and true perspective? By the analysis of facts not only we obtain the answer but also it helps us in identification of problems created by accountancy and its’ working practices in real world. Such as the economic crises of 2001-2002, and 2008 that resulted in failure of business tycoons (Enron, Worldcom, Xerox and many more) not only jolted the world economy, but also shed light on grey areas existing in accounting field (Coffee, 2004; Baily, Litan, & Johnson, 2008).
These crises (accounting scandals) raised question on accounting profession practices and…
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