3. Trade off between fair value accounting and historical cost accounting a) Relevance: Financial information is relevant when it influences the economic decisions of users, Fair value reporting is more relevant as it will allow users of financial statements to obtain a truer and fairer view of the company's real financial situation since it reflects the prevailing economic conditions and the changes in them. In contrast, historical cost accounting shows the conditions that existed when the transaction
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maximising representative agent. Dividends: the dividend policy could be completely irrelevant to its share price. This can be shown with an example that if firm A was to pay a large dividene then its retained earnings fall. However if B paid a larger amount then the retainbed earnings is correspondingly higher. Which ever way you go the if the capitalisation is the same than the market will force the price up on the larger dividend company. Trading Volumes: Orthodox models of financial markets imply that
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International Financial Reporting Standards (IFRS): Pros and Cons for Investors by Ray Ball* Sidney Davidson Professor of Accounting Graduate School of Business University of Chicago 5807 S. Woodlawn Ave Chicago, IL 60637 Tel. (773) 834 5941 ray.ball@gsb.uchicago.edu Acknowledgments This paper is based on the PD Leake Lecture delivered on 8 September 2005 at the Institute of Chartered Accountants in England and Wales, which can be accessed at http://www.icaew.co.uk/cbp/index.cfm. It draws
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Debits, Credits, and Inventory Costs Part 1: Double-Accounting Method of Recording When using the double-accounting system, also known as the double-entry method, each transaction on the General Journal and associated account activity catalog must be recorded at least into two accounts. The debit account, often on the left, is denoted by ‘Dr’ while the credit account, often on the right side, is denoted by ‘Cr’. The entries are made depending on the account type, which
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Companies must always use the equity method when they hold between 25% and 50% of the common stock of an investee. True False 12. The equity method is in many ways a partial consolidation. True False 13. Under the equity method of accounting for a stock investment, cash dividends received are considered a reduction of the investee's net
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FINANCIAL ACCOUNTING INFORMATION AND THE RELEVANCE/IRRELEVANCE ISSUE (Global Business & Economics Review Volume 5 No.2 December 2003 pp:140-175) Stanley C. W. Salvary, Canisius College ABSTRACT Some current research conclude that the numbers in financial statements are not relevant for three basic reasons. The numbers: (1) are not isomorphic with capital market values, (2) do not have a future orientation, and (3) are un-interpretable since they are based upon five different measurement attributes
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ACCOUNTING THEORY (FAR 600) Teaching and Learning Arrangements (SEMESTER: SEPT 2013 – JAN. 2014) COURSE CODE : FAR 600 PROGRAM : BACHELOR OF ACCOUNTING (HONS) CREDIT HOURS : 3 CONTACT HOURS : 3 STATUS : CORE TEACHING LECTURER : Prof Dr Rohana Othman OFFICE & PHONE NO. : Room 419 (Off. Tel: 03-55444987) E-MAIL : rohana799@gmail.com SYNOPSIS This course is designed to further enhance the students’ understanding of the concepts
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INTRODUCTION Organization might have a number of objectives such as customer satisfaction with the good quality of product that company produced, achieving a high level of market penetration, providing a good work environment to their employees and being able to achieve high revenue. Therefore, there is a number of strategic management accounting techniques that can be used by the organization such as just-in-time (JIT), total quality management (TQM), Lifecycle costing and others. One of the method that
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this report on the basis of my findings and observation relating to the topic. In this situation I was assigned to prepare report on “A study on the Accounting Information System at Mercantile Bank Limited in Bangladesh”. 1.2 Objective of study General objective: * The prime objective of this report is to analyze the “A study on the Accounting Information System At Mercantile Bank Limited in Bangladesh” Specific objectives: To evaluate the financial performance of Mercantile Bank Limited
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organizations. Pension fund managers, as do stockholders and financial analysts, use accounting information reported by companies to assess the economic performance of those companies and form expectations of future performance. Production managers use accounting information to estimate the cost of products they produce and thus, the relatively profitability of producing more of some products and less of others. Executives use accounting information to budget economic resources among operating units. Stakeholder
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