ACCOUNTING STANDARDS

Accounting Standards

Accounting Standards

Introduction

In this report, we will be discussing the proposition that corporate financial statements are management representations of the financial position and performance of a company and that accounting standards and practices do not contribute to ensuring investor confidence in the integrity of financial statements. When we talk about financial reporting and its standards, it cannot be said that they are without any flaws or they are perfect. In fact if we look at it from a broader prospective, we will come to know that financial reporting, economics, accounting, they all are part of social sciences. In natural sciences, we have definite laws, which have been tested and tried by scientists and practitioners over the years, however when it comes to social sciences and specifically the world of finance and accounting, it is comparatively new to the world. There have been different standards and theories in past an today there are very different from what we used to have before. Same goes for financial reporting and its standards.

It cannot be said that the standards we have are ultimate and they don't have flaws, as with the human progression things get obsolete and one day even they will be replaced. Considering the effectiveness of these reporting standards, we need to consider this that they are most common and globally used reporting standards. Now coming to the proposition that whether firms represent financial data on their personal will or they do it to give true picture to the investors, is still a matter of debate,. however , I am of the view that with regulation and sort of restrictions that we have today, it is very difficult for firms to hide and mislead any information, hence I don't agree with this proposition. In order to understand this issue in depth, there are few things that we have to consider before getting to the conclusion of our research.

Accounting Principles

The accounting discipline has undergone substantial changes since Fray Lucas created accounting theory Paciolo cargo and fertilizer, which has remained largely unchanged. Accounting as a discipline of human knowledge has evolved in the techniques and procedures used for the registration and control of business operations. As the production process increased in complexity and it went from a market economy to a production economy, where capital goods were growing importance. The accounting process was enriched with more procedures, techniques and rules for handling transactions.Thus, in early to a dealer interested in answering the question: How had won?.As he realized that for profit had to have capital, began to become important information concerning the financial position. Thus arose the three basic financial statements, the balance sheet and the income statement and cash flow statement.

Objectives And Classification Of Accounting Principles

There is a wide and vast literature on accounting principles and their applicability to the financial statements, but are actually accounting principles?.We can give a first definition of accounting principles, standards and rules as those of a general or specific entities issued by the accounting profession, which are applicable to the ...