This revision of Principles of Accounting is based on an understanding of the
nature, culture, and motivations of today’s undergraduate students and on extensive
feedback from many instructors who use our book. These substantial changes
meet the needs of these students, who not only face a business world increasingly
complicated by ethical issues, globalization, and technology but who also have
more demands on their time.
When I first began discussing the concept of a book on governmental accounting
for nonaccountants, the publisher, John Wiley & Sons, Inc., asked a
good question: “Who would be interested in a book on governmental accounting
who is not an accountant?” The quick answers were obvious—bond underwriters
and investors, lawyers, elected officials, financial and other managers working in
government, labor unions, and so forth.
Generally accepted accounting principles, known as GAAP, require that inventories be carried on the balance sheet at lower-of-cost-or-market. Lower-of-cost-or-market represents a departure from the historical cost concept, but is considered a conservative accounting measure.
Chapter 1 - A framework for financial accounting. After completing this chapter, students will be able to: Describe the two primary functions of financial accounting, understand the business activities that financial accounting measures, determine how financial accounting information is communicated through financial statements, describe the role that financial accounting plays in the decision-making process.
Chapter 1 - Uses of accounting information and the financial statements. Chapter 1 explores the nature and environment of accounting, with special emphasis on the users and uses of accounting information. It introduces the four basic financial statements, the concept of accounting measurement, and the effects of business transactions on financial position. This chapter concludes with a discussion of ethical considerations in accounting and a supplement entitled "How to Read an Annual Report."
Chapter 2 - Measuring business transactions. Chapter 2 continues the exploration of accounting measurement by focusing on the problems of recognition, valuation, and classification and how they are solved in the measuring and recording of business transactions.
administrative expenses, being treated as period costs.
ABSORPTION VARIANCE is the variance from budgeted absorption costing of manufactured product. See also ABSORPTION COSTING.
ACAT (Accreditation Council for Accountancy and Taxation) is a national organization established in 1973 as a non-profit independent testing, accrediting and monitoring organization. The Council seeks to identify professionals in independent practice who specialize in providing financial, accounting and taxation services to individuals and small to mid-size businesses.
The empirical relationship between capital controls and the financial development of credit and equity markets is examined. We extend the literature on this subject along a number of dimensions.Specifically, we
(1) investigate a substantially broader set of proxy measures of financial development;
(2) create and utilize a new index based on the IMF measures of exchange restrictions that incorporates a measure of the intensity of capital controls; and (3) extend the previous literature by systematically examining the implications of institutional (legal) factors.
In earlier book chapters, it was noted that the accounting profession uses an “all inclusive” approach
to measuring income. Virtually all transactions, other than shareholder related transactions like
issuing stock and paying dividends, are eventually channeled through the income statement.
However, there are certain situations where the accounting rules have evolved in sophistication to
provide special disclosures.
Thomas Ahrens Ph.D., is a Senior Lecturer in Accounting at the London School of
Economics where he has been working since 1996. His research is mostly qualitative.
It is broadly concerned with accounting and organisational process. Thomas has
compared management accounting practices in contemporary British and German firms
and studied the uses of performance measurement systems in a large U.K. restaurant
chain. He has also written on comparative and case study research in accounting.
Thomas’ latest research project is investigating performance measurement in British and
IAS 2 Inventories was issued by the International Accounting Standards Committee in
December 1993. It replaced IAS 2 Valuation and Presentation of Inventories in the Context of the
Historical Cost System (originally issued in October 1975).
The Standing Interpretations Committee developed SIC-1 Consistency—Different Cost Formulas
for Inventories, which was issued in December 1997
Creative accounting is nothing new. It has been a temptation and a problem from
the moment that accounting principles were first used to report on business
performance. There is an old joke about the accountant who is asked to add up two
and two and who produces the response ‘What would you like the answer to be?’
It is an appropriate reminder that financial measurement is not an exact science.
In fact this old joke provides a good starting point because it leads to a helpful
working definition of creative accounting.
The success or failure of a business is measured in dollars. And
dollars are recorded and reported using accounting. Accounting
is truly the language of business. No matter what your role
may be, if you are involved in business, you can benefit from
learning accounting. That’s what this book is all about—taking
the subject and making it understandable and accessible.
This monograph emerged from our efforts to study the behavior of the
households from the Townsend Thai Monthly Survey. This experience
convinced us that imposing an accounting framework and creating
financial statements would be a useful, indeed a necessary, first step
for the analysis of household finance, especially from high-frequency,
Governance research in accounting exploits the role of
accounting information as a source of credible information
variables that support the existence of enforceable contracts,
such as compensation contracts with payoffs to managers
contingent on realized measures of performance, the
monitoring of managers by boards of directors and outside
investors and regulators, and the exercise of investor rights
granted by existing securities laws. The remainder of Section 3
is organized as follows. Section 3.
Why is the market share of accounting measures shrinking,
and can cross-sectional differences in the extent of shrinkage be
explained? Has the information content of accounting
information itself deteriorated, or should we look to more
fundamental changes in the economic environment? For
example, Milliron (2000) documents a significant shift over the
past twenty years in board characteristics measuring director
accountability, independence, and effectiveness consistent with
a general increase in directors’ incentive alignment with
Bertrand and Mullainathan (1998) illustrate the potential
power of designs that consider interactions across governance
mechanisms. They examine the impact on executive
compensation of changes in states’ anti-takeover legislation.
Adoption of anti-takeover legislation presumably reduces
pressure on top managers. They attempt to distinguish
between optimal contracting and skimming theories in
explaining observed contracting arrangements.
These accounts measure the capacity or potential
of ecosystems to deliver ecosystem services in a
sustainable way. Typical indicators are Landscape
Ecosystem Potential (LEP), Green Accessible
Landscape Infrastructure (GALI) and Rivers
Ecosystem Potential (REP).
You likely have a general concept of what accountants do. They capture information about the
transactions and events of a business, and summarize that activity in reports that are used by persons
interested in the entity. But, you likely do not realize the complexity of accomplishing this task. It
involves a talented blending of technical knowledge and measurement artistry that can only be fully
appreciated via extensive study of the subject.
This project originated in the Board on Testing and Assessment
(BOTA) in 2002 as the No Child Left Behind (NCLB) Act of 2001 was
in its early stages of implementation. The initial discussions were
sparked by the different perspectives on the use of test-based incentives
by the board members, whose expertise included a wide range of disciplines.
In particular, the board’s interest in the topic was animated by the
apparent tension between the economics and educational measurement
literatures about the potential of test-based accountability to improve