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If accounting is to retain any credibility-and without credibility it is worthless - its guiding light must be neutrality in - Essay Example

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If accounting is to retain any credibility-and without credibility it is worthless - its guiding light must be neutrality in

The aims of financial account have a very major influence on the way institutions operate, on certain rules and regulations of accounting and accounting practices conducted at the corporate level. The two main goals of accounting policy is to firstly focus upon the importance of accounting systems for the private sector and secondly it is to be utilized by the government sector. Different countries place different level of importance on accounting. There are two kinds of users of accounting and accounting systems, these include the macro and the micro level users. The main difference between these users is the intention of using accounting information, this means that macro level users use it for different purposes and micro level users use it for different purposes (MA, 1997, p.198). Those who are referred to as macro level users include government agencies that uses accounting information for the purpose of economic planning and development. Those who are referred to as micro users are the ones who provide the capital and are given utmost importance in society. Body The two different users and the way they use accounting in different manners is quite evident in the role played by accounting in capital markets. For example in areas such as US and Canada, the system of accounting in these nations is micro user level and the broader aim of the accounting policy is to provide financial statements that are unbiased and fair (Flesher, 2010, p.66). When the emphasis is paid to providing fair and truthful accounting information, the organizations within these nations are expected to disclose their financial transactions in a reliable and credible manner. Transaction conducted by the organizations that follow the micro user level accountancy aims at achieving economic substance rather than conforming to rules and regulations set by the country. Nations that follow the macro user level accountancy system do not operate while aim at achieving fairness in providing accounting details and information. Traditionally the main aim of accounting has been to safeguard the loss of assets that take place in a secretive manner. This aim of accountancy was obtained by reporting less than the actually amount of assets owned and profit made by an organization. At the domestic level capital markets, the aim of accountancy is to achieve optimum level corporate governance. At the domestic level, those nations that follow micro user accounting systems, the main role of accounts and accountants is to provide reliable accounting information in order to evaluate the performance of the management. Management’s performance is measured through several means and the main way proposed is to how well they keep track of the organizations earning, dividends and cash flows. The main aim of the management is to increase the profit of the organization and for this they end up producing biased accounting reports and due to this there is a need to provide, unbiased and neutral accounting reports to decrease the conflict between the management and the owners of the business (Wolk, 2001, p.217). There have been ample amount of debate surrounding the impact of accounting on a businesses profits and well being, this have increase the possibility that certain methods of accountancy can be utilized to obtained desired aims and objectives. The aims and objectives that can be obtained include increasing competitiveness of ...Show more

Summary

Accounting Reporting Accounting Reporting Introduction The term accounting policy is assigned to the process of making decisions regarding the achievement of the aims and objectives of the profession of accounting…
Author : bobbydoyle
If accounting is to retain any credibility-and without credibility it is worthless - its guiding light must be neutrality in essay example
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