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accounting ethics, pertaining to disclosure and conflict of interest - Admission Essay Example
Finance & Accounting
Pages 4 (1004 words)
There are two different accounting concepts such as accrual accounting and cash accounting based on the way transactions are recorded. According to Hankins and Baker, under the accrual accounting method, financial transactions are recorded as they occur…
With the increasing complexity of the modern business environment, many accounting related topics in ACC 40A is under scrutiny now. This paper will evaluate some key current accounting related topics in ACC 410A that are of considerable importance in the present business context. Time value of money is a key aspect of accounting because every business transaction is recorded in terms of monetary value. Businesses generally do not record transactions in books of accounts if those transactions cannot be expressed in terms of money. There are two common methods such as historical cost and market value are used to record financial transactions in account books. Under historical cost approach, an asset’s original cost at the time of its acquisition is recorded in the firm’s accounting books whereas the current or fair market value of the asset is estimated and recorded in case of the market value approach. Both these accounting techniques have their own advantages and disadvantages. As Ahya points out, the historical cost approach is more reliable and hence it is necessary for the preparation of financial statements. As the author points out, historical cost method is based on the actual transaction and hence this valuation technique will be verifiable and free from management bias (33-34). ...
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