assist with planning) TOPIC: Discuss positive accounting theory and contrast it with normative accounting theory. Provide examples where appropriate. The purpose of this essay is to provide an overview of positive accounting theory (PAT) and highlight how this theory differs to normative accounting theory. Definitions and assumptions of both theories will be considered and examples of the theories will be provided. In addition specific theories related to PAT namely agency and the
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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. Under historical cost
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Benefits of a Cost Accounting Information System By kmoney4islam. Cost accounting offers benefits for manufacturing companies. A cost accounting information system offers benefits for many companies. Cost accounting is a type of accounting method concerned with the cost of goods manufactured and /or sold. Many factors are taken into consideration when cost accountants analyze business costs . The information determined by these accountants is used for inventory valuation ‚ financial statements
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View from PAT Positive accounting is to set some hypothesis which could affect accounting practice based on economic theory‚ using scientific methodology to do research and test those hypothesis. Simply speaking‚ it applied empirical research to accounting field. Positive Accounting focus on questions like “what is”‚ different from Normative Accounting which focus on questions like “what should be ”. Compare those two accounting theory‚ positive accounting theory is more scientific. Watts and Zimmerman(1986)
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Difference between historical cost and fair value accounting In order to make the most profitable and rational decisions entity’s stakeholders have to evaluate organisation’s financial statements. Today’s world of rapidly changing prices has made it difficult to estimate what something is actually worth. Thus leading to debates at what price – historical costing price or market value – assets and liabilities should be reported. Therefore‚ before making any evaluations about reported transactions
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Summer2011-Microeconomics-Exam Two Practice 1. To calculate the total utility of consuming N products: A. add the additional satisfaction of consuming each product up to N and multiply by its price. B. add the total satisfactions of consuming each product up to N. C. multiply the additional satisfaction from consuming the Nth product by its price. D. multiply total satisfaction from consuming N products by N. 2. Suppose that the following table lists the utility that Steve receives from consuming oranges at 50
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EuroJournals Publishing‚ Inc. 2009 http://www.eurojournals.com/finance.htm Determinants of Equity Prices in the Stock Markets Somoye‚ Russell Olukayode Christopher Dept. of Banking & Finance‚ Faculty of Management Science Olabisi Onabanjo University‚ Ago Iwoye‚ Nigeria P.O. Box 1104 Ijebu-Ode‚ Ijebu-Ode‚ Ogun State‚ Nigeria E-mail: kayodesomoye@yahoo.com Akintoye‚ Ishola Rufus Dept. of Accounting‚ Faculty of Management Science Olabisi Onabanjo University‚ Ago Iwoye‚ Nigeria E-mail: irakintoye@yahoo
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Conceptual Framework Cost Accounting Cost accounting‚ as a tool of management‚ provides management with detailed records of the costs relating to products‚ operations or functions. Cost accounting refers to the process of determining and accumulating the cost of some particular product or activity. It also covers classification‚ analysis and interpretation of costs. The cost so determined and accumulated may be the estimated future costs for planning purposes‚ or actual (historical) costs for evaluating
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Week I Quiz Results/Answers ECO561 1. Revenue increases when * producer surplus increases 2. An increase in the price of an inelastic good * increases revenues 3. Price elasticity of Demand increases when * people become less price sensitive over time 4. The purpose of a market in a market system is to * bring buyers and sellers into contact 5. By specializing in the production of one good‚ a company is able to benefit from economies of scale which increases its revenue. Which
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Questions 1. Suppose the price of coffee beans increases by $0.20 per pound. What is the effect of this raw material price increase on the demand for roasted coffee? If one pound produces 50 cups of coffee‚ would the price of a cup of coffee rising by $0.01? Explain. Price of the product comes from the production of the goods all the way till it hits the market shelf. So when the price of the product like coffee increases during the productivity of the product then the end cost could increase too. Changes
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