...Chapter 1 1. What is the difference between Data and Information? a. Data: raw facts that describe the characteristics of an event that, in isolation, have little meaning b. Information: data organized in a meaningful way to be useful to the user 2. What makes Information useful? c. Data is often processed (aggregated, sorted, etc.) and then combined with the appropriate context d. Decision makers typically require useful information to make decisions e. Must be relevant and reliable 3. Define “Relevant” in the context of useful information. f. Predictive value (helps with forecasting the future). g. Feedback value (corrects or confirms what had been predicted in the past). h. Timeliness (available when needed or in time to have an impact on a decision). i. Information must be relevant to the decision maker j. Information is relevant only if it would affect a business decision k. Information is relevant when it helps users predict what will happen in the future (predictive value) or evaluate how past decisions actually worked out (feedback value). l. It is also relevant if the information is received in time to affect their decisions (timeliness). 4. Define “Reliable” in the context of useful information. m. Predictive value (helps with forecasting the future). n. Feedback value (corrects or confirms what had been predicted in the past). o. Timeliness (available...
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...Journal of Accounting and Economics 7 (1985) 85-107. North-Holland THE EFFECT OF BONUS SCHEMES ON ACCOUNTING DECISIONS* Paul M. HEALY Massachusetts Institute of Technology, Cambridge, MA .02139, USA Received October 1983, final version received September 1984 Studies examining managerial accounting decisions postulate that executives rewarded by earnings-based bonuses select accounting procedures that increase their compensation. The empirical results of these studies are conflicting. This paper analyzes the format of typical bonus contracts, providing a more complete characterization of their accounting incentive effects than earlier studies. The test results suggest that (1) accrual policies of managers are related to income-reporting incentives of their bonus contracts, and (2) changes in accounting procedures by managers are associated with adoption or modification of their bonus plan. 1. Introduction Earnings-based bonus schemes are a popular means of rewarding corporate executives. Fox (1980) reports that in 1980 ninety percent of the one thousand largest U.S. manufacturing corporations used a bonus plan based on accounting earnings to remunerate managers. This paper tests the association between managers' accrual and accounting procedure decisions and their incomereporting incentives under these plans. Earlier studies testing this relation postulate that executives rewarded by bonus schemes select income-increasing accounting procedures to maximize their bonus compensation...
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...Hann Faculty Coordinator for BUSI 610: Introduction to Financial Accounting Re: Pre-term Course from Harvard Business School Publishing Date: June 3, 2015 BUSI 610, Introduction to Financial Accounting, is one of the Core courses that you will take in Fall 2015. This course is designed to help you become an informed user of financial statements. Given the duration of the term, we will be moving at a fairly rapid pace. The course will begin with a brief overview of the fundamentals of accounting (key accounting concepts, the accounting process, and the principal financial statements) and then move on to study in greater depth the various elements of financial statements. At the end of the course, I expect you will have a good understanding of a company’s financial statements—be familiar with the process of preparing the statements as well as the ability to interpret and analyze financial data for economic decision making. To do well in the course, you need to have a solid understanding of the fundamental elements of accounting; the remainder of the course will otherwise prove to be difficult. To help you better prepare for the course, you are required to take an on-line web-based course from Harvard Business School Publishing titled Financial Accounting: An Introductory Online Course (FA). This requirement is intended to ensure that all students have a common understanding of financial accounting basics. It also allows us to cover more advanced and interesting topics...
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...Course Outline School: Department: Course Title: Course Code: Course Hours/Credits: Prerequisites: Co-requisites: Eligible for Prior Learning, Assessment and Recognition: Originated by: Creation Date: Revised by: Revision Date: Current Semester: Approved by: Business Graduate Studies Accounting for Managerial Decision Making ACCT 701 56 N/A N/A Yes Basil Chan, John Harris Summer 2013 Geoffrey Prince Summer 2014 Winter 2015 Chairperson/Dean Students are expected to review and understand all areas of the course outline. Retain this course outline for future transfer credit applications. A fee may be charged for additional copies. This course outline is available in alternative formats upon request. ACCT 701 CENTENNIAL COLLEGE Accounting for Managerial Decision Making Course Description This course will introduce the student to the principles of management accounting. Topics include costvolume-profit relationships, relevant costing, performance measurement, and the application of management accounting concepts and techniques to support business decision making. Program Outcomes Successful completion of this and other courses in the program culminates in the achievement of the Vocational Learning Outcomes (program outcomes) set by the Ministry of Training, Colleges and Universities in the Program Standard. The VLOs express the learning a student must reliably demonstrate before graduation. To ensure a meaningful learning experience and to better understand...
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...JOURNALOF ELSEVIER Journal of Accounting and Economics 18 (1994) 157-179 Accounting &Economics Earnings management preceding management buyout Susan E. Perrya, Thomas offers b H. Williams** “School of Commerce. University of Virginia, Charlottesville, VA 22903-2493, USA bSchool of Business, University of Wisconsin, Madison, WI 53706, USA (Received February 1992; final version received March 1994) Abstract There are frequent expressions of concern in the accounting, economics, and legal literature about managers’ conflicting duties and incentives in management buyouts. This study is motivated by a concern about the managerial incentive to reduce reported earnings prior to the announcement of the buyout proposal. Our analysis of a sample of 175 management buyouts during 1981-88 provides evidence of manipulation of discretionary accruals in the predicted direction in the year preceding the public announcement of management’s intention to bid for control of the company. KeJ’ words: Contracting; JEL classification: Earnings management; Accruals; Management buyouts G34 1. Introduction Firms involved in going-private restructurings provide unique opportunities to investigate important accounting, economic, and legat issues. The accounting *Corresponding author. The authors want to thank Sharad Asthana, Larry Brown, J. Stanley Fuhrmann, Jerry Han, Jim McKeown, Steve Rock, Terry Warfield, Richard Willis, the workshop participants...
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...Schneider (1995) documented the fact that the controversy regarding the accounting for goodwill in US and abroad had existed since the early 1900s. The controversy focused on the recognition of goodwill as an asset, on its treatment and its link to the income statement. A search of the accounting literature yields two definitions of goodwill. One is that goodwill is the excess of purchase price over fair value of the net assets acquired. Alternatively, goodwill is defined as the price paid for excess earnings where excess earnings are defined as the difference between the earnings of the acquired asset over the normal earnings for a similar business. Historically, there are three views on the treatment of goodwill. The first suggests that goodwill should be written off immediately against retained earnings. The second view holds that goodwill is a wasting asset and it should be amortized over a useful life. Further, the amount of goodwill amortized should be allocated to periods where it contributes to company’s earnings. Goodwill arises is calculated as the difference between the value of the business as a whole and the aggregate of the fair values of its various identifiable assets both tangible and intangible. As outlined in Financial Accounting Standards Board Accounting Standards Codification 350: Intangibles - Goodwill and Other (formerly Statement of Financial Accounting Standards No. 142), Goodwill is “an asset representing future economic benefits...
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...The effect of voluntary changes in accounting procedures on earning is also used to test the implications of the theory. Reported changes in accounting procedures are available from two sources: the sample of depreciation switches used by Holthausen and changes reported by accounting trends and techniques. Accounting changes are collected from these sources for the sample companies. Procedure changes are decomposed according to the type of change. This table presents for the full sample 342 changes. There were 242 changes disclosed in the footnotes about changes on effect on earning , but the other 100 cases described the effect of the change as immaterial or not disclosed. These are coded to indicate whether the effect is positive or negative. We had 2 tests to certify the theory, the first one is contingency tests. The contingency tests are replicated using the effect of changes in accounting procedures on earnings available for bonuses as a proxy for discretionary accounting decisions. If the effect of the accounting change on this variable is positive, the change is classified as income-increasing. According to analysis, the results don't support the theory. However, there are several potential explanations of this findings: 1. It is more costly for managers to transfer earnings between periods by changing accounting procedures than by changing accruals, and 2. Changes in accounting procedures affect earnings and the bonus plan lower bound in the current and future years...
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...JM Ferreira Student Nr: 10011678860 Hotel Accounting 1 P O Box 10278 Assignment Code: 72367 B Test: 1 Edition 1 FONTEINRIET 1460 Tel: 0829283527 15 March 2015 Question 1. The accounting equation: Indicate classification of the items presented below by a tick, see example 1. | Assets | Liabilities | Owner’s Equity | 1. Cash | | | | 2. Bank Overdraft | | | | 3. Capital | | | | 4. Loans | | | | 5. Salaries Payable | | | | 6. Land and Buildings | | | | 7. Telephone Payable | | | | 8. Advertising Payable | | | | 9. Stock on Hand | | | | 10. Purchases | | | | 11. Rent Expense | | | | Question 2. Explain the importance of financial information for the following users: * Customers. Customers use Financial Statements to assess whether a supplier has the resources to ensure a steady supply of goods in the future. This is especially vital where a customer is dependant of a supplier for a specialized product or component. * Suppliers Suppliers need Financial Statements to assess the credit worthiness of a business and ascertain whether to supply goods on credit. Suppliers need to know if they will be repaid. Terms of credit are set according to the assessment of their customers' financial health. * Government Governments require Financial Statements to determine the correctness of tax declared in the tax returns. Government also keeps track...
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...Empirical research on the impact of fair value measurements on earnings management analysis Contents Abstract 1. Introduction 2. Background and hypothesis 3. Literature review 4、Methodology 5. Sample selection and description 6. The test on the earnings management universality 7. The Impact of the Fair Value Application on Earnings Management 7.1 Correlation Analysis of the Main Variables 7.2 The Empirical Test of Linear Regression Equation 8. Limitation 9. Summary References Appendix I . Appendix II . Abstract The impact of fair value standard application towards enterprise is far-reaching and important, mainly in measurement methods of the changes on assets and liabilities way. This shift of fair value measurement method helps business executives for some sort of motive or target to conduct earnings management, thereby artificially adjusted profits. The authors focus on the study of earnings management in the listed Corporation under the fair value model during the financial crisis. We investigate the correlation between the application of fair value accounting and earnings management for providing the policy basis to improve fair value accounting and standardizing corporate earnings management behavior. We collect the sample data by selecting the Chinese A-share listed companies, and use the modified Jones model as a tool to prove the listed companies in the existence of widespread earnings management behavior. Descriptive analysis and...
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...GAAP-based Accounting Amounts Comparable? Mary E. Barth* Stanford University Wayne R. Landsman, Mark Lang University of North Carolina Christopher Williams University of Michigan August 2011 * Corresponding author: Graduate School of Business, Stanford University, 94305-5015, mbarth@stanford.edu. We appreciate funding from the Center for Finance and Accounting Research, Kenan-Flagler Business School and the Center for Global Business and the Economy, Stanford Graduate School of Business. We appreciate comments from Elicia Cowins, Julie Erhardt, Margot Howard, Elmar Venter, an anonymous reviewer, and workshop participants at the University of Cologne, ESSEC Business School, George Washington University, Giessen Business School, University of Graz, IESE Business School, University of Leeds, University of Missouri, Oklahoma State University, Shanghai University of Finance and Economics, Singapore Management University, Southern Methodist University, Stanford University, Washington University at St. Louis, and the European Accounting Association Congress. We also thank Dan Amiram and Mark Maffett for assistance with data collection. Electronic copy available at: http://ssrn.com/abstract=1585404 Are IFRS-based and US GAAP-based Accounting Amounts Comparable? Abstract This study documents whether application of IFRS by non-US firms results in accounting amounts comparable to those resulting from application of US GAAP by US firms. IFRS firms have greater accounting system...
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...In accounting, goodwill is an intangible asset associated with a business combination. Goodwill is recorded when a company acquires (purchases) another company and the purchase price is greater than the combination or net of 1) the fair value of the identifiable tangible and intangible assets acquired, and 2) the liabilities that were assumed. Goodwill is reported on the balance sheet as a noncurrent asset. Since 2001, U.S. companies are no longer required to amortize the recorded amount of goodwill. However, the amount of goodwill is subject to a goodwill impairment test at least once per year. Outside of accounting, goodwill could refer to some value that has been developed within a company as a result of delivering amazing customer service, unique management, teamwork, etc. This goodwill, which is unrelated to a business combination, is not recorded or reported on the company's balance sheet.In accounting, goodwill is an intangible asset associated with a business combination. Goodwill is recorded when a company acquires (purchases) another company and the purchase price is greater than the combination or net of 1) the fair value of the identifiable tangible and intangible assets acquired, and 2) the liabilities that were assumed. Goodwill is reported on the balance sheet as a noncurrent asset. Since 2001, U.S. companies are no longer required to amortize the recorded amount of goodwill. However, the amount of goodwill is subject to a goodwill impairment test at least...
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...http://solutionsmanualtestbanks.blogspot.com/2011/10/accounting-principles-weygandt-9th.html Accounting Principles Weygandt Kieso Kimmel 9th Edition Solutions Manual -------------------------------------------------------------------------- Name: Accounting Principles Author: Weygandt Kieso Kimmel Edition: 9th ISBN-10: 047031754X Type: Solutions Manual - The file contains solutions and questions to all chapters and all questions. All the files are carefully checked and accuracy is ensured. - The file is either in .doc, .pdf, excel, or zipped in the package and can easily be read on PCs and Macs. - Delivery is INSTANT. You can download the files IMMEDIATELY once payment is done. If you have any questions, please feel free to contact us. Our response is the fastest. All questions will always be answered in 6 hours. This is the quality of service we are providing and we hope to be your helper. Delivery is in the next moment. Solution Manual is accurate. Buy now below and the DOWNLOAD LINK WILL APPEAR IMMEDIATELY once payment is done! Prepare to receive your Accounting Principles Solution Manual in the next moment. -------------------------------------- Accounting Principles Solution Manual Here’s a sample list of all other solutions manuals we have, if you need any one of them please contact us at solutionsmanualzone@gmail.com -A Transition to Advanced Mathematics by Douglas Smith, Maurice Eggen 5 Solution Manual -Accounting by Carl S. Warren, James M. Reeve 24...
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...VALUATION WITH FAIR VALUE ACCOUNTING AND HISTORICAL COST ACCOUNTING METHOD IN PLANTATION SUBSECTOR OF INDONESIAN AGRICULTURAL INDUSTRY IN THE PERIOD OF 2007-2012 Karina Putri Ramadhani1 and Indra Pratama2 1 Thesis Writer, Swiss German University 2 Thesis Advisor, Swiss German University Abstract The analysis of biological assets valuation with fair value accounting and historical cost accounting method in plantation subsector of Indonesian agricultural industry, in the period of 2007-2012, tries to evaluate the relevance of historical cost towards the fair value of biological assets. It also tries to look for empirical evidence on the differences in calculations on biological assets between FVA and HCA toward company’s EBIT, net income, and potential tax liabilities. The research tests 5 companies within the plantation subsector in agricultural industry listed in Bursa Efek Indonesia (BEI). This study shows that there is a strong correlation between all variables tested. Among all statistical tests conducted, all hypotheses are rejected. This study concludes that the historical value of biological assets does not represent its real fair market value, or irrelevant. Also, the change in biological assets valuation from historical cost to fair value accounting would significantly affect the company’s EBIT, tax expense, and net income. Keywords: Fair Value, Historical Cost, Agricultural Industry, Plantation, Fair Market, EBIT, Tax Expenses, Net Income. 1. Introduction The dynamic...
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...Business School School of Accounting Unit Outline 309875 Accounting Theory and Analysis 308 Semester 1, 2014 Unit study package number: Mode of study: Tuition pattern summary: 309875 Internal Lecture: 1 x 1.5 Hours Weekly Workshop: 1 x 1.5 Hours Weekly This unit does not have a fieldwork component. Credit Value: Pre-requisite units: Co-requisite units: Anti-requisite units: Result type: Approved incidental fees: Unit coordinator: 25.0 305229 (v.0) Advanced Financial Accounting 260 or any previous version Nil Nil Grade/Mark Information about approved incidental fees can be obtained from our website. Visit fees.curtin.edu.au/incidental_fees.cfm for details. Lisa Cullen Name: +618 9266 7567 Phone: Lisa.Cullen@curtin.edu.au Email: 407 Building: 406A - Level 4 Room: Consultation times: Tuesday 2-4pm and Thursday 12.30-2.30pm Name: Phone: Email: Building: Room: Name: Phone: Email: Building: Room: Name: Phone: Email: Building: Room: Administrative contact: Name: Phone: Email: Building: Room: Andrew Reynolds +61 8 9266 3602 A.Reynolds@curtin.edu.au 407 426 John Evans +618 9266 3156 John.Evans@curtin.edu.au 407 407 Clive Oliver +618 92667295 Clive.Oliver@curtin.edu.au 407 412 Lesley Hill +618 9266 7295 Lesley.Hill@cbs.curtin.edu.au 407 412 Teaching Staff: Learning Management System: Blackboard (lms.curtin.edu.au) 309875 Accounting Theory and Analysis 308 Bentley Campus 19 Feb 2014 School of Accounting, Curtin Business School Page: 1 of 9 CRICOS Provider Code...
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...Accounting Standards Harmonization and Financial Statement Comparability: Evidence from Transnational Information Transfer Clare Wang The Wharton School University of Pennsylvania wclare@wharton.upenn.edu Current Version: January 2011 Abstract This study investigates whether harmonization of accounting standards enhances the comparability of Önancial information across countries. First, I statistically deÖne and link comparability to Örm value in a two-Örm, sequential information release framework. I then empirically test the prediction that a Örm yet to announce earnings reacts more strongly to the earnings announcement of a foreign Örm when both report under the same rather than di§erent accounting standards. My analysis of abnormal price and volume reactions for a global sample of Örms supports this prediction. Next, in an attempt to control for the e§ects of changes in reporting quality, I use a di§erence-in-di§erences design around the mandatory introduction of International Financial Reporting Standards (IFRS). I Önd that mandatory adopters experience a signiÖcant increase in market reactions to the release of earnings by voluntary adopters compared to pre-mandatory adoption. This increase is not observed for non-adopters over the same period. Taken together, my study shows that accounting standards harmonization facilitates transnational information transfer, and suggests comparability as a direct mechanism. I thank my dissertation committee members Brian Bushee,...
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