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Accounting Theory - Essay Example

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Accounting Theory

The accounting theory that would be relevant in relation to this article would be the implementation of accounting application that the company might use so as to revive from the crisis. In other words, it can be said that the positive accounting theory would relate well to this article. Another issue in reference to accounting theory that would also be relevant is the stakeholder theory. Both these theories would assist in focusing on the problem of the company and facilitate to develop measures that would help the company recover from the current crisis.According to Freeman & Et. Al. (2010), stakeholders tend to manipulate the disclosure of a company’s financial information to a significant extent. It was also claimed that the theory of stakeholders influenced the moment with regard to the declarations pertaining to the earnings. Evidence was found regarding the matter that managers try and manipulate the insights of their particular shareholders pertaining to the performance of the firm. Thus, it can be said that a company should implement and alter this theory in a way which would help the company to determine a decision regarding “creative accounting” without being manipulated. In this case, the Suncorp Company underwent a dip in its annual profits but it still maintained to hit a high of four-week in its share prices. It was fundamental because the company maintained a fair practice regarding its management operations and in disclosing its financial information....
Thus, it can be said that a company should implement and alter this theory in a way which would help the company to determine a decision regarding “creative accounting” without being manipulated (Freeman & Et. Al., 2010). In this case, the Suncorp Company underwent a dip in its annual profits but it still maintained to hit a high of four-week in its share prices. It was fundamentally because the company maintained a fair practice regarding its management operations and in disclosing its financial information. However, it was studied that reporting was not the sole phenomenon in accounting related to stakeholder manipulation. Stakeholder groups even strongly manipulated the standards that were to be laid down in respect to international accounting. It was also said that though the groups did not enjoy complete authority in ascertaining the standards but few stakeholders yet displayed a higher degree of manipulating capability (Freeman & Et. Al., 2010). In case of positive theory of accounting, justification is given regarding the operations of the business with no recommendations as to how the operations need to be (Schroeder & Et. Al., 2010). Positive accounting theory establishes the opportunistic way in which a business operates so as to increase the wealth of the individuals concerned with the business. This theory assists in adopting the accounting procedures. Positive accounting theory is known to forecast that organizations require look for methods that would help to support the owners’ interest with the managers’ interest of a specific organization. This would require the preparation of proper financial statements as well as monitor and audit them. Thus, positive accounting theory would facilitate in identifying the proper accounting ...Show more

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The paper "Accounting Theory" discusses the implementation of accounting application that the company might use so as to revive from the crisis. The writer of the paper also gives information about the stakeholder theory that focuses on the problem of the company…
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