At present, financial accounting standards are established and propagated on the basis of two key conceptual structures, namely, Financial Accounting Standards Board (FASB) and International Accounting Standards Boards (IASB) (Cong 2013). This essay will discuss and justify that accounting theory played a role in setting of accounting practices but it played no significant role in setting of accounting standards. Rather, several accounting standards were set by the conceptual frameworks formulated
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Scott, Financial Accounting Theory, 6th Edition Instructor’s Manual Chapter 2 Suggested Solutions to Questions and Problems 1. P.V. Ltd. Income Statement for Year 2 Accretion of discount (10% × 286.36) $28.64 P.V. Ltd. Balance Sheet As at Time 2 Financial Asset Cash $315.00 Shareholders’ Equity Opening balance Net income Capital Asset Present value 0.00 $315.00 $315.00 $286.36 28.64 Note that cash includes interest at 10% on opening cash balance of $150. 2. Suppose that P.V. Ltd
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normative theories of accounting. In doing so we examined conceptual framework projects which prescribe guidelines for how accounting should be done. We then examined a number of normative theories relating to how profit and the elements of our financial statements should be measured. This week we abandon our normative theories and begin looking at positive theories. In particular we examine a positive theory that we have made mention of a number of times, Positive Accounting Theory or PAT. Upon
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Financial Accounting Theory Test 1: 1) Please briefly describe the essences of the following cases of accounting scandal or earnings management. (20 points) A) ENRON (8 points) * Enron created many special purpose entities (SPEs) controlled by senior Enron officers that they used in conducting off balance sheet financing * SPE’s borrowed money from banks using Enron’s stock as collateral However all of the liability was reported on the SPE’s books, not on Enron’s, even though
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flows are already known so the net income becomes predictable under the ideal conditions. So the income statement becomes less useful to the investors. Balance sheet on the other hand contains more useful and relevant information for the investors .Financial statements are not biased and contains representational faithfulness .The information under ideal conditions are also verifiable. Ideal conditions of uncertainty Under ideal conditions of uncertainty we assume that the states of nature and state
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CHAPTER 2 SUGGESTED SOLUTIONS TO QUESTIONS AND PROBLEMS 1. P.V. Ltd. Income Statement for Year 2 Accretion of discount (10% × 286.36) $28.64 P.V. Ltd. Balance Sheet As at Time 2 Financial Asset Cash $315.00 Shareholders’ Equity Opening balance Net income Capital Asset Present value 0.00 $315.00 $315.00 $286.36 28.64 Note that cash includes interest at 10% on opening cash balance of $150. 2. Suppose that P.V. Ltd. paid a dividend of $10 at the end of year 1 (any portion of year 1 net income
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(prescriptive) accounting theory Inte baserad på empiriska tester (som positive teorier är) utan de är baserade på vad researcher tror ska eller borde inträffa vid särskilda omständigheter. Teorier som föreskriver (prescribe) istället för förklarar (describe) särskilda handlingar kallas för normativa teorier eftersom att dom baseras på normer som researchern som lägger fram teorierna har. T.ex. säger hur vi ska ta till oss och använda redovisningsmetoder. Kapitel 2 Theories of regulation
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Convergence Project Financial Accounting Standards Board and International Accounting Standards Board By: Lydia Ferdin Our world is changing and sometimes in business, there are times when we must change our policies, standards, and guidelines as well to keep up with the natural changes in our environment. This leads to the idea of convergence as it relates to accounting. One of the world’s greatest naturalist and Greek professor Heraclitus (535 BC - 475 BC), once coined the theory and phrase “the
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Of Modern Accounting ...................................................................................... 2 1.2 19th Century – The Beginnings of Modern Accounting in Europe and America ............................... 3 1.3 20th Century – The Development of Modern Accounting Standards................................................. 4 1.4 21st Century – Accounting Regulation in Modern Commerce ........................................................... 4 2. DEVELOPMENT OF ACCOUNTING .......
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Development Of A Conceptual Framework Accounting Essay ‘Developing a conceptual framework is an impossible possibility ‘it is hard to say that this statement is wrong or not. First, there is no accurate or definitive view of what constitutes a conceptual framework, but there is no doubt that conceptual framework helping a development of academic theory, meanwhile, it is also provide a great deal of prescription. Developing a conceptual framework is feasible and promising. In this issue, I explain
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