posted by Avatar on May 29
Events in the financial markets have reshaped accounting and the advent of computer technology has added to the risks that are involved in dealing and handling with such financial information. Such information can be used against a firm for personal or criminal needs by people inside and outside of the company who knows how to utilize that information. Manipulation is also addressed by these practices for it aims to establish a set of checks and balances within the system allowing financial experts to quickly discover and deal with such threats (inconsistencies). Insider trading in stock markets have risen globally and the recent sub-prime lending crisis that has crippled the US economy are just some of the problems that have deep roots in flaws within the financial and accounting systems of companies who should have been able to determine the abnormalities before they caused much problems.
posted by Avatar on May 25
The set of accounting principles may be basic and elementary but the rules governing their use and creation must follow internationally approved standards. This allows global trade to go on regardless of geographic location. These principles are revised and deliberated on, by a board of accountants who represent the majority of the countries who participate in the standardization of these practices on a daily basis. Changes are made and adjustments to the rules are drafted, presented and deliberated on by the representatives to ensure that the principles are evolving with the current status of the global economy. Incidents that involve loopholes are plugged by amendments and new requirements such as the “Sarbanes and Oxley Act” of 2002 which were implemented in the US to prevent further taking advantage of loopholes in the existing set of principles making it relevant to modern financial markets.
posted by Avatar on May 21
The periodicity principle states that accounting information should be presented in periodic manner that is also included in the annual book keeping information set. Sales for the day are to be reflected for the daily, monthly, quarterly as well as annual records or depending on the time frame the business requires.
Wherever in the world you may be, there are a set of defined accounting principles that are defined by the country’s monetary authority. They are all patterned after the IFRS or the International Financial Reporting Standards that is established by a board of selected representatives form the accounting field or bodies of the countries who use and apply the principles that are detailed in the said laws/rules.
posted by Avatar on May 17
The principle of prudence states that accounting information is direct to the point without any beautification factor and that the numbers are on an as is basis meaning it is consistent and not embellished with non-fact. The principle of Prudence states that accounting practices and information should detail the value of assets as well as monetary funds. The information should be done in a way that is not for short term use only but for the long run but it is allowed that asset and other fixed materials be accounted for at their depreciated value. There is a need for the accounting of all assets (buildings, machinery and other assets) that are owned by the company for it is part of the overall value of a firm that should be included in financial reports submitted to requesting authorities.
posted by Avatar on May 13
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he principle of regularity is defined as the conformity of the said accounting practices to applicable laws and rules defined by the country’s financial branch (also known as the principle of Consistency). The Principle of sincerity defines the truthfulness of the information as a true description of the company’s financial status. Permanence of records defines the absoluteness and coherence of the company’s financial information which ever way you may look. This states that information is consistent whether inside or outside the company.
The principle of non-compensation simply states that the financial system should have accounting of both income and expenses (debit and credit) which can be traced or checked easily with the provided accounting information.
posted by Avatar on May 9
This is a body of collective knowledge that dictates or outlines the basic principles accounting procedures and practices are to abide by. There are several principles that have to be satisfied by a set of accounting principles and they are; regularity, sincerity, permanence of records, non compensation, prudence, continuity and periodicity. These principles govern most countries of the world with the exception of communist countries that have their own set of rules that governs accounting practices. Most developing countries as well as developed ones adopt a single set of principles that allows one country to deal with the other and vice versa for trade purposes.
