ACCOUNTING

Subjectivity Lies at the Heart of the Accounting



Subjectivity Lies at the Heart of the Accounting

Introduction

Accounting is defined as a collection of data in a systematic, structured, and valuable quantitative information expressed in currency units on the transactions. It is the art of recording the data then classify it and summarize in an important manner in the monetary terms and last interpret the results. Bookkeeping can be defined the recording of the transactions on a daily basis in an unsystematic way. Accounting is divided into different types: financial accounting, management accounting, tax accounting, environmental management accounting etc. Financial accounting can be defined as the collecting data, sorting it, and recording, adding together and reporting in monetary terms (William 1994, pp. 409). It uses certain principles to record, classify, and summarize the data collected in monetary terms. The main function of financial accounting is to maintain the economic life history of a company: record the past figures that can use to make future decisions. The cost accounting is based on the data which is attained from the financial accounting procedures.

Accounting is the art and science of recording, classify, summarize and report on books, records, states and Forms, significantly, in terms of money transactions and, in general, events that have a numeric character and interpret financial and the results obtained there from.

Discussion

It is true that accounting firms engaged in both consulting and audit has cut corners. But as knowledge of accounting is more serious than a "subjective art". The proof is that malfeasance eventually be objectively identified. Recent events related to the financial crisis led financial regulators, politicians and accountants to take a different view on accounting standards. Singled out, the international accounting standards initiated by the IASB have been made partly responsible for the financial chaos and economic evaluation, especially the "fair value". It is worth recalling that the fair value is defined and "is the amount for which an asset could be exchanged, a liability settled or equity instrument granted, between knowledgeable, willing parties in normal conditions of competition". However, since late 2007 and in 2008, there have been some discrepancies in the value of more than 10% during the same day over very broad market indices. How to develop in this case financial assets if markets do not work under normal conditions?

In France, the debate over fair value, open well before the application of international accounting standards in 2005, has refocused in recent months on the measurement to fair value of financial assets. IAS 39 on financial instruments is particularly challenging (Sheer 2000, pp. 592).

Remember that "accounting is a system of organizing financial information to capture, classify, record data and submit audited figures reflect fairly the assets, liabilities, financial position and results of the entity to date. It is indeed influenced by the economic, political and social development of a country or a community of countries and in turn influences the decisions of investors and business leaders (Bedford 1967, pp. 82). Thinking around the measurement at fair value is ...