...The Rise of “Economic Consequences” – Notes The impact of accounting reports on decision making may be the most challenging accounting issue of the 1970s. By Stephen A. Zeff Notes by Tyler Shivers Introduction There are increasing “outside forces” in the standard setting process since 1960s. Two parallel developments marking this trend * Individuals and groups rarely had shown interest in setting accounting standards but then started intervening actively & powerfully in the process * New arguments had be brought up and the term “economic consequences” has been used to describe them Economic consequences – the impact of accounting reports on the decision making behavior of business, government, unions, investors, and creditors. * Accounting standards setters must take into consideration of detrimental consequences when deciding on accounting questions. Until recently, accounting policy making was deemed neutral in effect or was considered not responsible. Policy makers have been aware since 1960s that there was a third party intervention issues but not the Economic Consequences argument till 1970s When management began intervening, its true position was probably disguised This is the tactical rhetoric suggested by examination of arguments 1. The traditional accounting model, where management was genuinely concerned about unbiased and “theoretically sound” accounting measurements. 2. The traditional accounting model, where management was really seeking...
Words: 1271 - Pages: 6
...1. What is meant by the term “economic consequences” in accounting standard-setting? A. Accounting standards can have detrimental impacts on the wealth levels of the providers of financial information. Financial accounting is objective; if a company is not doing well, that's what the financial statements must present. "Economic consequences" is meant the impact of accounting reports on the decision making behavior of business, government, unions, investors and creditors. It is argued that the resulting behavior of these individuals and groups could be detrimental to the interests of other affected parties. And, the argument goes, accounting standard setters must take into consideration these allegedly detrimental consequences when deciding on accounting questions. 2. What economic consequences arguments are used in this letter? A. The economic consequences arguments that are used in this letter is the considerations of the wide range of concerns that have been expressed about the derivatives and hedging proposal, including concerns related to the potential impact on the capital markets, the weakening of companies’ ability to manage risk and others. The letter is suggesting for fairness and transparency with regard to the proposal of FASB and be open for public debate and comments as this is important in businesses, the customer’s and the economy as a whole. 3. What do you believe is the main point of the letter? A. The main point of the letter...
Words: 588 - Pages: 3
...THE RISE OF ECONOMIC CONSEQUENCES The impact of accounting reports on decision making may be the most challenging accounting issue of the 1970s. by Stephen A. Zeff Since the 1960s, the American accounting profession has been aware of the increasing influence of "outside forces" in the standardsetting process. Two parallel developments have marked this trend. First, individuals and groups that had rarely shown any interest in the setting of accounting standards began to intervene actively and powerfully in the process. Second, these parties began to invoke arguments other than those which have traditionally been employed in accounting discussions. The term "economic consequences" has been used to describe these novel kinds of arguments. By "economic consequences" is meant the impact of accounting reports on the decisionmaking behavior of business, government, unions, investors and creditors. It is argued that the resulting behavior of these individuals and groups could be detrimental to the interests of other affected parties. And, the argument goes, accounting standard setters must take into consideration these allegedly detrimental consequences when deciding on accounting questions.* The recent debates involving foreign currency translation and the accounting for unsuccessful exploration activity in the petroleum industry have relied heavily on economic consequences arguCopyright © 1978 by Stephen A. Zeff. *Ed. note: For the opinion of an accounting standard setter, see Oscar...
Words: 5829 - Pages: 24
...Principles of Economics Sharonda Thorpe, RN, BSN Professor Sarah Uhimchuk Principles of Economics-ECO 100 January 29, 2012 Suggest how an economist would approach the problem of alcohol abuse. Provide two (2) possible solutions to this problem. Include the four (4) elements of the economic way of thinking in your analysis. To suggest how an economist would approach the problem of alcohol abuse, one needs to understand the elements of the economic way of thinking. Four elements are: principle of opportunity cost, which means what you sacrifice to get something. Marginal principle is another element, which includes marginal benefits that result from a small increase in activity and marginal cost, which is the additional cost resulting from a small increase in activity. The principle of voluntary exchange is another element of the economic way of thinking, which is based on the notion that people act in their own self-interest. People won’t exchange one thing for another unless the trade off makes them better off. A forth element would be the principle of diminishing returns which means at a certain point (called the point of diminishing returns), additional input to a system of production will produce less and less output. O”Sullivan (2012). In other words, Scarcity: where economists study situations where needs or wants exceed means. Therefore, people have to make choices. Rationality is assumed to guide people's choices...
Words: 1200 - Pages: 5
...Dustin Westmoreland Utah Valley University – Weimar Republic Spring 2014 The Weimar years were marked by extraordinary and unrivaled economic, political, and social struggles and crises, one occurring after another, like a hammer decimating an already weakened rock. Its beginning was especially difficult in that Germany was weary and devastated after four years of unprecedented warfare. By 1918 the world had been shocked with over 8.5 million killed on both the Allies and Axis sides (WWI Casualty and Death Tables) with many more severely mangled and scarred – body, mind and spirit. This shows evident through the experiences of German Soldier, Ernst Simmel; he writes, “when I speak about the war as an event, as the cause of illness, I anticipate something has revealed... namely that it is not only the bloody war which leaves such devastating traces in those who took part in it. Rather, it is also the difficult conflict in which the individual finds himself in his fight against a world transformed by war. Either in the trenches or at home can befall a single organ, or it may encompass the entire person” (Simmel, 1918). For Ernst, and millions of other participants, the war had forever changed their world, including the foundation of their country. An armistice was finally signed on November 11, 1918. Allied nations didn’t hesitate to execute their idea of justice for Germany. By January 1919, hundreds...
Words: 2697 - Pages: 11
...Health Economics and Health Policy A critique of the methods used to measure and value health in cost-effectiveness studies submitted to NICE. Introduction The responsibility to provide data concerning “Good value for money” in regards to a new treatment or healthcare programme intervention has for itself a remarkable relevance. However, this information has become much more important in recent years due to the fact that we are facing a combination of unprecedented demand with the limitation of resources and the necessity of making decisions regarding priority setting in the healthcare system. Priority setting in healthcare means to determine what is most important in the context of finite resources as well as to decide who is going to benefit from a particular health care service as giving priority to one group of people inexorably implies taking it away from another one. (William, 1998). Nowadays, health care systems are facing the problem of how to set priorities in the allocation of health care resources in order to provide a high quality of care to those who need it and at a cost their governments can afford. All this happens in a time when people have greatest expectations concerning the care they should receive and the health care innovation offers broader options for interventions. (Littlejohns et al, 2012). In England the NHS has the obligation to provide a comprehensive and fair service for all and at the same time to promote an equal...
Words: 2476 - Pages: 10
...Business Economics Assessment The assessment addresses the following learning outcome: * Evaluate the impact that external micro and macro environments have on the activities and performance of organisations. Submission dates: Part 1 – Friday 4 February 2011 Part 2 – Friday 8 April 2011 Assessment Brief The assessment for the Business Economics module is a group portfolio (individual for re-sitting students) consisting of two parts to be submitted mid way through the autumn and spring terms. The portfolio will provide an analysis of the microeconomic and macroeconomic environments that impact on an organisation or sector of the group’s choice. The first part of this portfolio will consist of a group report to be submitted by the end of week 3 of the spring term which identifies the key micro economic constraints that impact on the organisation or sector under consideration. In terms of weighting the first element contributes 50% of the marks for the module. This first element will address some of the key microeconomic aspects affecting the business or sector selected. It will consist of a report that identifies the key features and constraints that impact on the competitive environment under consideration. Specifically, this will address: 1. The extent of competition in the sector/market – e.g. the number of competing firms, the size of these firms and any particular issues that arise from this, such as market dominance, price leadership...
Words: 581 - Pages: 3
...Facts The Sanchez’ entered into a contract with the producers of Surprise Home Renovation to lease their home for one week. The consideration for the lease was $50,000 worth of home accessories and an all-expense paid trip to Disney World. During the lease term, Surprise Home Renovation expensed approximately $250,000 in renovating and remodeling the Sanchez home. The Sanchez’ would like to affirm the potential tax consequences of the engagement with Surprise Home Renovation. Issues 1. Should the consideration of the lease be considered rental income, prize, or neither? 2. Was the consideration received, or a portion thereof, for the leasehold rights taxable? 3. Was the compensation received for the leasehold rights adequate consideration for the lease term? 4. Is the value, or a portion thereof, of the improvements taxable to the homeowners upon reversion? Legal Discussion According of §74 of the Internal Revenue Code (IRC), gross income includes amounts received as prizes and awards, unless the income falls under a particular exception . As of 1954, §74 was enacted, in part, to overrule two cases that held a prize and award to be tax exempt. According to the Code, an exception is granted when a prize is the result of religious, charitable, scientific, educational, artistic, literary, or civic achievement. While it may be considered that the intentions of Surprise Home Renovations are civic and charitable in nature, the fact that the Sanchez’ sought...
Words: 919 - Pages: 4
...Cambridge Resources for the IB Diploma Paper 1 (SL and HL) markschemes Examples of markschemes for Exam practice: paper 1 in the Economics for the IB Diploma CD-ROM are provided below. Paper 1 section A: Microeconomics Chapter 2 Competitive markets: demand and supply SL/HL core topics Part (a) questions 2.3 (a) Answers may include: • Definitions of demand and quantity demanded. • Theory of demand: law of demand with reference to changes in demand and factors that can cause changes in demand. • Demand and supply diagram showing initial equilibrium price and quantity, and a leftward shift in the demand curve, resulting in a lower equilibrium price and quantity and showing that there is no contradiction. • Examples of demand curve shifts and movements along a demand curve. Answers may include: • Definitions of supply and quantity supplied. • Theory of supply: the law of supply with reference to changes in supply and factors that can cause changes in supply. • Demand and supply diagram showing initial equilibrium price and quantity, and a rightward shift in the supply curve, resulting in a lower equilibrium price and greater equilibrium quantity. • Examples of supply curve shifts and movements along a supply curve. Answers may include: • Definitions of normal good, excess demand, reallocation of resources. • Theory of demand and supply with reference to excess demand, the factors that can cause shifts in the demand curve and the role...
Words: 12156 - Pages: 49
...Economics of Olympics ECON1001D – Macroeconomics Yurii Hrabovetsky 2015-12-11 Jason Dean The economics of the Olympics revolve around the prospect of high economic growth within the country post-Olympic years. This is often found to be an utter lie. The majority of the time the host country is promised a great amount of profit but the truth is that they tend to lose a lot of money on it – most of which comes from tax revenues. “During the competition between communities for the right to host a future Olympic Games, politicians and proponents bring forth predictions touting the economic benefits to the region that ultimately wins the right to host the Games” (Philip Porter, 2008, Page 470). Many politicians believe this idea of the economic value of the Olympics. Most of the time it is found that these countries lose a majority of the money. “However, when the Games are over the host communities are often left with substantial debts and, as we demonstrate below, little or no noticeable benefits” (Porter, 2008, Page 470). The predictions that are made and the results of the Olympics are often found to be completely different. This mostly due to the use of the input-output models and the misinterpretation of the short term results without consideration for the long term effects. This report will focus on how the predictions are made, the issues with these predictions, and the effects after the Olympics have ended. One of the models used to predict the results...
Words: 2024 - Pages: 9
...identification and evaluation of the potential impacts (effects) of proposed projects, plans, programs, or legislative actions relative to the physical-chemical, biological, cultural and socioeconomic components of the total environment. The primary purpose of the EIA process, also called the ‘NEPA process’ (National Environmental Policy Act) is to encourage the consideration of the environment in planning and decision making and to ultimately arrive at actions which are more environmentally compatible. NEPA of 1969 effective from January 1, 1970 in USA and is referred to as the ‘Magna Carta for the environment’ in (CEQ, 1993a) Council on Environmental Quality (CEQ) guidelines and regulation and other number of federal agency procedures and regulations, is to ensure the balanced decision making regarding the environment occurs in the total public interest. Project planning and decision making should include the integrated consideration of technical, economic, environmental, social and other factors. Most of these considerations can be referred to as “the three E’s” (engineering or technical, economics, and environment) The requirement of NEPA is understood significantly under three terms namely, 1. Environmental inventory 2. Environmental Impact Assessment 3. Environmental Impact Statement “Environmental inventory” is also known as ecological factors or Baseline data. It is a complete description of the environment as it exists in an area where...
Words: 1944 - Pages: 8
...1. Discuss the basic principles of contract law. What are the characteristics of a valid contract? How are contracts terminated? What are the legal consequences of terminating a contract? How is contract law, as an example of “private law regulation of business,” different in its operation from the public law regulation of business which we discussed for most of the semester? The law presiding over contracts is state law which is comprised of common law and judge-made rules. All the states except Louisiana have passed the Uniform Commercial Code’s (UCC) Article 2 which sets the rules and guidelines for contracts dealing with goods. Essentially, in order for a contract to be valid, there must be an offer and acceptance of the offer, all parties must be legally capable of entering into a contract, there must be evident consideration, and most states have a Statue of Frauds. To expand on offer and acceptance: A proposed contract must be offered by one party, known as the “offeror,” and accepted by the other party, known as the “offeree.” Offers must be certain and even if an offer has been made, the contract has not been formed until the offeree accepts the offer. Terms of acceptance and rejection are different for every contract. In certain cases, as stipulated by the idea of common law exactness, such as in realty, services, or insurance, the acceptance must be the mirror image of the offer and if not, the offer is considered to be rejected and a counteroffer occurs. However...
Words: 1029 - Pages: 5
...Corruption In India “Corruption is Social Evil” “Power tends to corrupt, and absolute power corrupts absolutely.” In its simplest sense, corruption may be defined as an act of bribery or misuse of public position or power for the fulfillment of selfish motives or to gain personal gratifications. It has also been defined as "Misuse of authority as a result of consideration of personal gain which need not be monetary". In recent Centuries India has earned a place among the THREE most corrupt countries in the world. Corruption in India is a consequence of the nexus between Bureaucracy, politics and criminals. India is now no longer considered a soft state. It has now become a consideration state where everything can be had for a consideration. Today, the number of ministers with an honest image can be counted on fingers. At one time, bribe was paid for getting wrong things done but now bribe is paid for getting right things done at right time. It is well established that politicians are extremely corrupt the world over. In fact, people are surprised to find an honest politician. These corrupt politicians go scot-free, unharmed and unpunished. Leaders like Lal Bahadur Shastri or Sardar Vallabh Bhai Patel are a rare breed now who had very little bank balance at the time of death. The list of scams and scandals in the country is endless. Now Recently Before Start 2010 Commen Wealth Games Corruption is playing major role with commen wealth games. The Bofors payoff...
Words: 734 - Pages: 3
...Overpopulation in India, Causes, consequences, solutions Felipe Benjumea Juan Casares EAS Overpopulation occurs when the number of people living in an area exceeds the limit the area is capable of having. In other words the relationship between the human population and its local environment is unbalanced. This is problematic because as individuals, we rely on a local area for subsistence; therefore, we are limited by the productivity of a given area. If productivity does not meet our demands, nature will be in charge of balancing the scale. However, we as humans are animals of reason. Therefore we are capable, through technology and culture, of living in an area that should, in theory, be unable to support us. And what makes it worst is the fact that, regardless of political (countries) and geographical barriers, we all share a common home called mother earth. Therefore overpopulation affects the individual area suffering from it, and, because of globalization, the rest of the world. However, the countries most affected by extreme population are of course the countries suffering from it. In our world there are many countries, principally, Asian countries that reside under this “deplorable” conditions of overpopulation. To understand overpopulation, it is necessary to analyze the underlying reasons behind it, the consequences of it, and most importantly the solutions for it. Like mentioned above, culturally and geographically, Asian countries are more prone to suffer...
Words: 1458 - Pages: 6
...Corruption In India “Corruption is Social Evil” “Power tends to corrupt, and absolute power corrupts absolutely.” In its simplest sense, corruption may be defined as an act of bribery or misuse of public position or power for the fulfillment of selfish motives or to gain personal gratifications. It has also been defined as "Misuse of authority as a result of consideration of personal gain which need not be monetary". In recent Centuries India has earned a place among the THREE most corrupt countries in the world. Corruption in India is a consequence of the nexus between Bureaucracy, politics and criminals. India is now no longer considered a soft state. It has now become a consideration state where everything can be had for a consideration. Today, the number of ministers with an honest image can be counted on fingers. At one time, bribe was paid for getting wrong things done but now bribe is paid for getting right things done at right time. It is well established that politicians are extremely corrupt the world over. In fact, people are surprised to find an honest politician. These corrupt politicians go scot-free, unharmed and unpunished. Leaders like Lal Bahadur Shastri or Sardar Vallabh Bhai Patel are a rare breed now who had very little bank balance at the time of death. The list of scams and scandals in the country is endless. Now Recently Before Start 2010 Commen Wealth Games Corruption is playing major role with commen wealth games. The Bofors payoff scandal of...
Words: 734 - Pages: 3
