thereby recognizing an increased obligation to assist investors to predict firm performance and value. Economic consequences is a concept that asserts that‚ despite the implications of efficient securities market theory‚ accounting policy choice can affect firm value. Positive accounting theory (PAT) is concerned
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+0)26-4 Accounting Theory NEED FOR ACCOUNTING Business is one of the sources of earning income. Whenever a business is started‚ it requires investment of certain amount which is called as capital. With this amount of capital the businessman may deal either with trading business or manufacturing business. In a trading business‚ he will buy goods at a lesser price and sells the same to others at a higher price. In case of manufacturing business‚ he has to buy raw materials and incur other
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always behave in accordance with the efficient market hypothesis‚ then should we reject the research that has embraced the EMH as a fundamental assumption? In this regard we can return to earlier chapters of this book in which we emphasised that theories are abstractions of reality. Capital markets are made of individuals and as such it would not (or perhaps‚ should not) be surprising to find that the market does not also act in the same predictable manner. Nevertheless‚ the EMH has helped provide
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Reporting Final Exam Solution. Accounting standards (5 MARKS) 1. Explain what gives Australian accounting standards authority and how is it enforced? The Corporations Act gives the standards the force of law. ASIC administer the Corps Act. and hence enforce the standards. Failure to comply with the standards can include legal proceedings‚ goal‚ financial penalties and prevention from acting as a manager or director of a company in the future. In addition‚ members of the accounting bodies (CPA‚ ICAA
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Introduction 1. Definition According to Robert K. Elliot‚ 1997‚ assurance is a positive declaration that produces quality information which enhances the degree of confidence for all intended users as well as improves the quality of decision that being made. It is also part of corporate governance which provide reliable and accurate information to the stakeholders such as investors‚ employees‚ government‚ voluntary sector and market regulators‚ regarding the efficiency and effectiveness of
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of an organized system to replace the existing hodgepodge of record-keeping. QUESTION 2 Islamic accounting can be defined as the “accounting process” which provides appropriates information (not necessarily limited to financial data) to stakeholders of entity which will enable them to ensure that the entity is continuously operating within Islamic Sharia’ ah while “conventional” accounting can be defined to be the identification‚ recording‚ classification‚ interpreting and communications economic
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125 each‚ terms 2/10‚ n/30. 20 Freight of $220 on the October 19 purchase was FOB shipping point. 29 Paid for the October 19 purchase. Instructions Using a perpetual inventory system‚ prepare the journal entries‚ in your exam booklet‚ to record the transactions. [pic] Question 2 Internal Controls 15 marks The following internal control procedures are used by Brooks Company for cash receipts and disbursements. 1. Cashiers receive all over the counter receipts
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achieving future cash flows. Limitations * Companies omit items that cannot be measured reliably. * Income is affected by the accounting methods employed. * Income measurement involves judgment. Earnings Quality Companies have incentives to manage income to
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earnings quality since net income does not representatively portray the economic performance of the business entity for the period. Income smoothing relies not on falsehoods and distortions but on the wide leeway existing in alternatively accepted accounting principles and their interpretations. It is conducted within the structure of gaap. In effect‚ it redistributes income statement credits and charges among periods. The prime objective is to moderate income variability over the years by shifting
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UNIVERSIDAD CARLOS III DE MADRID Accounting I Mid-term exam March 2012 Name: NIU Group: MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. There is only one correct answer. Grading system: correct answer = 1 point; incorrect answer = -0‚33 points; no answer = 0 points. 1. Which of the following statements is FALSE? a. A proprietorship is a distinct and separate entity from the proprietor from an accounting viewpoint. b. The stable monetary
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