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Essay / Research Paper Abstract
This 4 page paper looks at 4 issues in accounting in the UK. The first is the way that non current assets are accounted for, the second looks at the problems encounter when valuing stock, the third considers the challenges of the historical costing convention and the last part discusses the use of ratio analysis to determine if the benefits outweigh the difficulties. The bibliography cites 2 sources.
Page Count:
4 pages (~225 words per page)
File: TS14_TEaccutUKcon.rtf
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Unformatted sample text from the term paper:
life expectation of twelve months or more (Elliott and Elliott, 2005). The concept under which these may be accounted for include the accruals or matching basis, where there is
the idea that the expenditure that is used to buy the assets should be matched against the revenue that they produce. For example, of there is a piece of equipment
bought that will have a useful economic life of three years, and as such it will be making a profit for the company for three years, the costs associated with
the revenue and the profit should be accounted for in the same period as the revenues that it creates, apportioned between these three periods in some way (Elliott and Elliott,
2005). This may also be seen as complying with the historical cost convention. The asset will be shown on the balance sheet at the cost to the company in
the first year. In some situation there will also be the ability to capitalize other coasts associated with its purchase, such as legal costs or as time goes by improvements
may also be capitalized. The asset is then deprecated or amortized in the case of a non tangible asset over the period of its economic life. The historical cost convention
can result in some difficulties, as some assets will be written off, but may actually appreciate in value or may loose value at a greater rate than the depreciation, so
the balance sheet does not represent the book value of the company. To overcome this it is possible for assets to be revalued, with all assets in that class requiring
revaluation, this has been seen as required when fixed assets have included property. Question 2 There are a number of problems facing an entity when reporting on the
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