The usually elegant, glossy pages of Annual Reports released by big companies can lead one to believe that the financial statements contained therein are accurate and complete and that they fairly reflect the true financial condition of a company. This impression is all the…
mpanies and the worlds top-5 accounting firms, have resulted in lawsuits and bankruptcies, as well as government rescue efforts, to the detriment of many investors and taxpayers. Some of these companies were formerly prestigious financial institutions with huge capital and with global reach such as Citigroup, JP Morgan, and AIG. This paper seeks to study this recent phenomenon with a view to identifying what would perhaps be a good long-term solution.
The generally accepted accounting principles (GAAP) have been tagged as one of the fundamental causes of the recent financial and banking crisis that originated in the United States and sent shock waves throughout the world. According to the Accounting Dictionary, the GAAP consists of “standards, conventions, and rules accountants follow in recording and summarizing transactions, and in the preparation of financial statements.” There is no central authority that promulgates the rules of GAAP; instead the Securities and Exchange Commission accepts and enforces the compiled issuances from FASB, AICPA, and other sources. The Accounting Principles Board (APB) of AICPA defines GAAP as encompassing “the conventions, rules, and procedures necessary to define accepted accounting practice at a particular time,” and that the principles are derived from “experiences and reason” that have proved useful.(AICPA, 1970, cited in Wolk et al., 1997). Voluminous rules under GAAP have been issued over the years, and the complexity of these rules which have not been consistently organized around fixed and commonly agreed principles have not increased our understanding of financial reports. In fact, they have fostered a lack of clarity and transparency.
Although the GAAP are designed for the preparation of financial statements for external users, internal decision makers also use them for various purposes including decisions regarding promotions and year-end bonuses to its executives. Management has some leeways to impact ...
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In order to remedy this situation, a company would likely use short-term loans to pay employees what they are owed. This would then take wages and salaries out of liabilities and replace them with debt. On the other hand, it is sometimes possible that a company has money to pay their employees before they actually have to do so.
Manufacturing overhead for application to jobs during December Manufacturing overhead for December= total manufacturing overhead – manufacturing overhead till November =2400000- 2200000 =200000 Optic Vision would apply $ 200000 of manufacturing overhead during December.
The conventional accounting impact uses the basic accounting principle of “Matching”. The Matching concept is basically a “fundamental concept of accrual basis accounting that offsets revenue against expenses on the basis of their cause-and-effect relationship.
The objective of the internal accounting system is to generate financial information that will streamline operational costs. As a result the operations can be made more efficient. In order to meet the objective of cost control, the accounting system provides information in several areas: cash receipts, cash disbursements, petty cash, payroll and fixed assets (Hill and Jones, 2007).
As a marketing manager for the Crunchy Cookie Company, I would not underestimate sales for a number of reasons. Cookies are frequently eaten edibles and underestimating its sales might create a shortage of products. If the budget is inappropriate, materials are ordered in accordingly and will not result in an increase in sales.
Management accountants seem to be moving from their traditional roles of being scorekeepers and controllers in an organization to playing a strategic role. This essay will analyze the changing role of management accountants in modern day businesses by looking at the