Limitation of historical cost accounting Historical cost accounting: assets are recorded at the amounts paid/ received at acquisition Problem: +) inflation, +) increase in asset values are not reflected in financial statements (wearing out of assets, increase in market value) Advantage: +) objective method: documentary evidence to prove the purchase price of an asset, or amounts paid as expense. +) costs can easily be verified. * Alternative method of accounting that have been developed
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International Financial Reporting Standards Colin Erskine DU- Accounting 301 03/13/2014 International Financial Reporting Standards “Over the last decade, progress has been made to harmonize financial accounting standards and practices into one set of single standards to be implemented by businesses domestically and internationally” (Harper, A. Leatherbury, L. Machuca, A. Phillips, J.). There has been some controversy among accounting professionals regarding the impact that switching to International
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Advantages and disadvantages of Historical Cost accounting Historical cost accounting has been a controversial method that experienced many criticisms over a period of time, especially since it considers the acquisition cost of an asset and does not recognize the current market value. Merits and demerits of this method are as follows. The most obvious advantage of HC accounting is objectivity. It is a predominantly objective system, which records the original cost of an item when it was purchased
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Executive Summary Accounting concepts are the rules and guidelines used in accountancy and one of these is the historical cost accounting. This concept is an accounting technique that values an asset on the balance sheet at the price paid for the asset at the time of its acquisition. Moreover, the historical cost accounting is the situation in which accountants record revenue, expenditure and asset acquisition and disposal at historical cost. This means the actual amounts of money, or money’s
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.......................................................i 1. Motor Vehicle............................................................................................................................................1 2.2 Type of Asset and cost...............................................................................................................................2 2.3 Vehicle purchase options....................................................................................
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adequacy of accounting ratios as a means of monitoring the state of a business in a selected organisation, using examples. 1.0 Terms of reference In this report, I will be evaluating the adequacy of accounting ratios, so that the owner can keep an eye on what condition is their business in. This will able the business to see whatever they are making profit or making loss. The business which I will particular focus at will be ISIS. Also, this report will include the advantage and disadvantage of using
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the ones that were most recently placed there. FIFO Advantages The FIFO method is simple to understand as well as to operate. The method makes sense because the products that are made or received first are the first ones to be utilized or sold. FIFO helps to reduce old or outdated inventory by using it first before the newer inventory is received and sold. Another advantage of the FIFO method is that the inventory is stated at the current cost since those items are the most recent items placed
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Pros & Cons of GAAP and IFRS Convergence The International Accounting Standards Board (IASB) was formed in an attempt to bring uniform accounting standards within international countries through its issuing of the International Financial Reporting Standards (IFRS). Today, over 100 countries including Canada, India, and Japan have adopted these standards for financial reporting. The growth of multinational companies such as Coca Cola and the increasing desire of cross-border investing have made
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organization. The ability to manage cost require financial data in a relevant form. Strategies Super Bakery Inc is a virtual corporation. This means that the company is composed of several different businesses. There is a central organization that outsources, production, selling, and shipping. The actual Super Bakery Inc core structure strategize and utilize outsourcing which minimize long-term cost of building, machinery, employees. This strategy minimize cost, but require commitment to the business
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Advantages and Disadvantages of switching from U.S.GAAP to IFRS Nara Yoon Charles Center Summer 2009 Advantages and Disadvantages of switching from U.S.GAAP to IFRS 2 In today’s business, markets are demanding increasing conformity. Many countries have converted to and implemented the International Accounting Standards Board (IASB)’s accounting standards. The United States, however, still maintains its own Financial Accounting Standards Board (FASB). Both IASB and FASB have created International
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