Need for Accounting Standards Essay Example for Free

Need for Accounting Standards Essay Critically evaluate the need for accounting standards and the need for a set of principles on which they are based. Accounting Standards Accounting standards contain a set of rules and governing practices for the treatment of all financial transactions. The main objective of accounting standards is to establish recognition, measurement, presentation and disclosure requirements dealing with financial transactions and key events which are important in the financial statements of companies. These financial statements give end-users important information, as well as an in depth understanding about an organizations performance, position and cash flow. Some examples of users of financial statements include potential investors, employees, suppliers and government agencies. As such, accounting standards provide the basic framework for financial statements to be presented in a fair and credible manner, such that it reflects the true overview of the financial status of an organization. These standards also help to present financial statements in a standardized and coherent manner, so that end-users worldwide are able to extract information and make decisions based on them. Advantages of Accounting Standards One advantage of having accounting standards is that it helps to ease the understanding of financial statements. What this means is that with accounting standards, financial statements reflect the financial position and status of an organization in a clear and coherent manner. With the need to publish financial statements in accordance to accounting standards, it also improves the credibility and reliability of the information present in the financial statements. End users, such as potential investors, top management and stakeholders, are able to make more informed decisions with greater confidence based on the information extracted. Accounting standards also provides guidance for accountants in their line of work. When financial reporting issues arise, accountants may refer to published accounting standards to determine how to publish an event. Some examples of these issues include new accounting transactions and new actions incorporated by an organization. Since accounting standards serve both as a reference and a guideline to accountants, this reiterates the transparency, reliability and credibility of financial statements when they are published based on a common accounting framework. Disadvantages of Accounting Standards A disadvantage of using accounting standards is in its inflexibility. For example, an accountant working in an organization which complies with accounting standards might find himself having a hard time in his line of work. This is because he has to make the organization’s unique experience fit into the guidelines laid out in published accounting standards. Another disadvantage of accounting standards is in its cost to comply with the standard. When a company decides to comply with the new standard, it must first consider the requirements of the standard, and what actions the company must take to implement the standard and the cost to do so. In many cases, this proves to be very costly as implementing and complying with a new standard would require system upgrades and employee training. Principle-based Standards Principle-based standards (PBS) is a framework of generally accepted accounting principles (GAAP) which accountants use for financial reporting. Some examples of the guidelines found in PBS include regularity, consistency, sincerity, prudence, continuity, periodicity and good faith. In PBS, an accountant follows these simple key objectives which help to ensure good reporting. The rules and guidelines set out in PBS only serves as reference and guide the accountant when he is doing his financial reporting. Advantages * Flexible, its broad guidelines allows it to be used in various circumstances * Allows companies to produce financial report using a method that best suit them Disadvantage * Lack of guidelines could lead to variation in financial reporting, making it difficult in terms of comparability Rules-based Standards Rule-based standard (RBS) refers to a list of detailed rules that must be followed when preparing financial statements. The list of rules serves as a checklist when accountants prepare financial statements at the end of a company’s fiscal year. This approach is more favoured by accountants because in preparing the financial reports by following the RBS checklist, it reduces the possibility of being brought to court if their judgements of financial statements are found to be incorrect. Advantages * Having a defined list of rules in preparing financial statement allows standardization, improving consistency which allows comparability between different companies * Easier to audit for compliance purposes Disadvantage * Having to follow a detailed set of rules results in rigidity, each transaction is accounted with respect to each rule. * Accountants have to comply to the rules set forth in RBS or face penalties for non-compliance. Conclusion In conclusion, there is a necessity for accounting standards when companies prepare their financial reports. Financial statements prepared based on accepted accounting standards not only gives users a detailed overview of the financial position of a company, but also assures users that the information they had obtained is reliable, credible and transparent. Question 2 The International Accounting Standards Board’s Framework for the Preparation and Presentation of Financial Statements requires financial statements to be prepared on the basis that they comply with certain accounting concepts, underlying assumptions and (qualitative) characteristics. Five of these are: Matching/accruals, substance over form, prudence, comparability and materiality. Briefly explain the mean of each of the above concepts/assumptions. IASB Framework The International Accounting Standards Board (IASB) framework is drawn up and used in preparing and presenting financial statements. The framework was drawn up and approved in April 1989 and published in July 1989. It was adopted by the IASB in April 2001 and later in September 2010; the Conceptual Framework for Financial Reporting 2010 was approved by the ISAB. (Deloitte, 2012) The purpose of the framework is to lay down guidelines to help ISAB shape the preparation and presentation of financial statements for end users. The IASB Framework acts as a guideline to the Board in establishing future frameworks and as well as a guide to solving accounting issues that are not addressed directly in an International Accounting Standard or International Financial Reporting Standard or Interpretation. The scope of the framework includes the objective of financial report, the qualitative characteristic of useful financial information, the elements of financial statements and the measurement of the elements of financial statements. The focus would be on five of the many qualitative characteristics present in the IASB Framework. The five qualitative characteristics, namely matching/accruals, substances over form, prudence, comparability and materiality would be further discussed in detail as follows: Matching/Accruals Concept Accruals concept is an accounting method that measures the performance and position of a company by journaling economic events regardless of when cash transactions occur. According to this concept, the revenues and expenses are recognized when they are earned or incurred and not when actual money is received or paid. The matching concept is an extension of the accruals concept, whereby revenue earned by the company and the expenses incurred by a company to earn that revenue has to be accounted in the same accounting period. For example, a business records its utility bills as soon as it receives them and not when they are paid, because the service has already been used. The company ignores the date when the payment will be made. Substance over Form Substance over form is the concept that the information shown in the financial statements and accompanying disclosures of a business should reflect the underlying realities of accounting transactions, rather than the legal form in which they appear. This would result in a true view of the affairs of the entity to be presented. Substance over form is critical for reliable financial reporting, particularly in cases of revenue recognition, sales and purchase agreements. For example, a lease might not transfer ownership to the leasee but the leasee has to record the leased items as an asset if it intends to use it for major portion of its useful life or where the present value of lease payment is fairly equal to the fair value of the asset, etc. Although legally the leasee is not the owner, so the leased item is not his asset, but from the perspective of the underlying economics the leasee is entitled to the benefits embedded in the use of the item and hence it has to be recorded as an a sset. Prudence Concept The prudence concept, also known as the concept of conservatism, refers to be cautious when it comes to the recording of business transactions. It is stated that under the prudence concept, the amount of revenues recorded should not be overestimated; neither should the amount of expenses be underestimated. One should be conservative in recording the amount of assets, and not underestimate liabilities. (Steven Bragg, 2011) In terms of profit and loss, anticipated profits cannot be recorded down as profits until they materialize. Some examples of exercising prudence is when company’s inventory should be valued ‘at cost or market price, which is less’, and a provision should set up for an allowance for doubtful accounts. Comparability Concept Comparability is one of the key qualities which accounting information must possess. Accounting information is comparable when accounting standards and policies are applied consistently from one period to another and from one region to another. The characteristic of comparability of financial statements is important because it allows us to compare a set of financial statements with those of prior periods and those of other companies. Financial statements of one entity must also be consistent with other entities within the same line of business. This should aid users in analyzing the performance and position of one company relative to the industry standards. It is therefore necessary for entities to adopt accounting policies that best reflect the existing industry practice. For example, a company which sells mobiles phones values its inventory based on First In First Out (FIFO) method previously, it must continue to do so in the future so as to preserve consistency in the reported inventory balance. A switch to other methods may cause a shift in the value in the inventory, which results in lack of basis of comparability. Materiality Concept It is stated that information is material if its omission or misstatement could influence the economic decisions of users taken on the basis of the financial statements (IASB Framework) Materiality therefore relates to the significance of transactions, balances and errors contained in the financial statements. Materiality defines the threshold or cutoff point after which financial information becomes relevant to the decision making needs of the users. Information contained in the financial statements must therefore be complete in all material respects in order for them to present a true and fair view of the affairs of the entity. For example, the government of the country in which a company operates in working on a new legislation which would seriously impair the companys operations in future. Although there are no figures involved, but the implication on the company would be so great that it would be material for this information to be made known to parties it may concern. References IASB Framework, 2012, http://www.ifrs.org/current-projects/iasb-projects/conceptual-framework/Pages/Conceptual-Framework-Summary.aspx (Cited 23 December 2012) Deloitte IAS Plus, History of IASB Framework, http://www.iasplus.com/en/standards/standard4 (Cited 23 December 2012) Steven Bragg, 13 March 2011, What is the prudence concept in accounting, http://www.accountingtools.com/questions-and-answers/what-is-the-prudence-concept-in-accounting.html (Cited 23 December 2012)

A Childs Struggle in Alices Adventures in Wonderland Essay -- Alice

A Child's Struggle in Alice's Adventures in Wonderland      Ã‚   Lewis Carroll's Wonderland is a queer little universe where a not so ordinary girl is faced with the contradicting nature of the fantastic creatures who live there. Alice's Adventures in Wonderland is a child's struggle to survive in the condescending world of adults. The conflict between child and adult gives direction to Alice's adventures and controls all the outstanding features of the work- Alice's character, her relationship with other characters, and the dialogue. " Alice in Wonderland is on one hand so nonsensical that children sometimes feel ashamed to have been interested in anything so silly (Masslich 107)." The underlying message of Alice's Adventures in Wonderland is a rejection of adult authority. The character of Alice is not at all like what you would find in a typical children's book. "The character of Alice herself is a bit puzzling, even to the modern child, because it does not fit a stereotype. How much more unusual she must have seemed to Victorian children, used to girl angels fated for death (in Dickens, Stowe, and others), or to impossibly virtuous little ladies, or to naughty girls who eventually reform in response to heavy adult pressure... But Alice is neither naughty nor overly nice. Her curiosity leads her into her initial adventure and most of the latter ones in the book... (Leach 119)." As Alice makes her way through Wonderland , she is faced with many pompous personalities that have their own ways of thinking and do not understand why Alice does not agree with their views. Alice takes into consideration what each character says. After becoming quite confused and disgruntled she learns that everyone in Wonderland is in fact m... ...,1865. Empson, William "Alice in Wonderland" Some Versions of Pastoral (1974). 812-14 Rpt. in Nineteenth- Century Literature Criticisms. Ed. Laurie Harris. Detroit: Gale Research, 1982. 2: 112- 14. Harris, Laurie, ed. Nineteenth- Century Literature Criticisms. Detroit: Gale Research, 1982. 76 vols. Hubbell, George Shelton "The Sanity of Wonderland" The Sewanee Review (1927) 387-98. Rpt. in Nineteenth- Century Literature Criticisms. Ed. Laurie Harris. Detroit: Gale Research, 1982. 2: 109. Leach, Elsie "Alice in Wonderland" The Victorian Newsletter (1964) Rpt. in Nineteenth- Century Literature Criticisms. Ed. Laurie Harris. Detroit: Gale Research, 1982. 2: 119. Masslich, George B. "A Book Within a Book" The English Journal (1921) 119-29. Rpt. in Nineteenth- Century Literature Criticisms. Ed. Laurie Harris. Detroit: Gale Research, 1982. 2: 107.

Managerial tasks Essay

A. Every business requires managers to control and execute the business. But the skills required for each individual industry will vary. Here we will study the managerial skills required for a manager of a vending machine business, a housecleaning service and an appliance repair business. Vending Machine business: The markets for such business are targeted to the pedestrians and passersby. The vending machine should have sufficient stock and should be refilled at regular intervals. The manager concerned must have the idea about the demand and supply of the product, have the idea about stock taking and to identify locations with maximum sales. The manager should be mobile in order to verify the potential of each vending machine and identify any shortfall or lacuna. Also, have idea about advertising and marketing at vantage locations. Housecleaning service: The business is more about relationship, because the clients will be repeat customers. The better service you can provide the better business you can generate. The manager should know where to tap customers, should be a good man manager and ensure quality of work. Good PR skill is a must. The manager should also ensure the safety precautions required during house cleaning. Appliance repair business: This business also requires good PR and is based on repeat customers. But, the manager also need to be technically sound, and should have knowledge about repairing the specific range of product. He should be a good man manger, stick to tight schedules and ensure quality service. The manager should keep himself and his team upgraded with the newest technologies and latest changes in the product. It is a technology driven business, which requires lot of excellent technical skill set apart from the basic requirements of marketing and sales.

Foreign Policy of the United States after 9/11 Attacks by Muslim Extremists Free Essay Example, 2250 words

In general, the 9/11 attacks were initiated by a group of Muslim extremists which are mostly based in the Middle East (Pelovangu, 2010). It is apt therefore to start this discussion by providing a background to the Middle East and the events and situation in the region which have led to the 9/11 attacks. A group of fanatical Islamists and extremists had originally designed to formulate a caliphate covering half of the world (Tristam, 2011). Their fervour was fuelled by one man s charisma and leadership -- Osama bin Laden. However, their goals were not really based on the desires of changing and making the world a better place. But their actions nevertheless were slowly changing the world. Through his Al-Qaida organization, the group was prompted to carry out various attacks on shoestring budgets and nothing but the desire to fulfil their life s mission (Tristam, 2011). Their attacks were however not carried out solely by the organization. The Al-Qaida group represented a small but influential strain in Islam Extremist movement which has been dominant in the Middle East and South Asia as a response to Western domination and globalist presumptions (Tristam, 2011). On one hand, Al-Qaida is the extreme expression of the conflict within Islam itself not so much the conflict between Islam and the West; and an expression of the progressive reform and oppressive conservatism which has been controlled and stifled by Muslim societies and Muslims philosophies. This controlled and diminished progress within the sect was an ideal launching off point for Al-Qaida which was very much opposed to reform and the white and Western teachings which set out to overthrow corrupt Arab and Islamic practices in the Middle East (Tristam, 2011). The Middle East is considered to be a region rich in oil. The politics and issues stemming from the region have mostly revolved around oil (Askari, 2006, p. 7). With the major energy reserves which help support western economics, the involvement in the Middle East has always been an important element for various superpowers and world leaders, including the US, Britain, Soviet Union, and France (Shah, 2010). Before the discovery of oil in the region, the region has already seen many wars and conflicts over land and rich resources. We will write a custom essay sample on Foreign Policy of the United States after 9/11 Attacks by Muslim Extremists or any topic specifically for you Only $17.96 $11.86/pageorder now