Fundamental Principles of Accounting - Essay Example

FUNDAMENTAL PRINCIPLES OF ACCOUNTING FUNDAMENTAL PRINCIPLES OF ACCOUNTING The role of accounting in organizations is to ensure proper financial management. Fundamentals of accounting offer companies the ability to analyze the assets and liabilities through different platforms. In the case of "The Unexpected Benefits of Sarbanes-Oxley ensuring proper management came as a cost in that the running did maintain costs but they did not deliver. Assets and liability of a company create the need to consider the break even analysis in order to determine the profits.

In the case “Statement of Financial Accounting Concepts No. 2” ensuring a break even analysis facilitated the company through the tough economic times. Principles of accounting dictate that for losses to be incurred, institutions do not meet the breakeven point. The breakeven point ensures a company to pay all the bills while ensuring the business continues running (Wagner & Dittmar, 2006). Financial analysis is also important in the scenario presented by the two cases. Forecasting is clear in the two cases and both companies had a strategy placed on the set objectives.

Agents of accounting such as profits, losses, liabilities, expenditure, and other financial statements come in handy in ensuring the success of the set objectives. The ability to access the stability, viability, and the profitability of a company is evident in both cases. The role of decision making in financial assessment is also evident in both cases. This is because it dictates the continuity or discontinuity of the operational department of a business. The cases display proper ability to make purchases of given materials while providing consumers with products.

In the long run, the company benefits from the profits, solvency, stability and liquidity of assets (Wagner & Dittmar, 2006). ReferencesWagner, S., & Dittmar, L. (2006, April). The Unexpected Benefits of Sarbanes-Oxley. Retrieved October 5, 2012, from Harvard Business Review : The Unexpected Benefits of Sarbanes- Oxley