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Essay / Research Paper Abstract
This 7 page paper looks at the accounting practices using accruals accounting and historical costing and considers to what extent they are able to add clarity and accuracy to accounts and in which ways they may increase confusion. The paper looks at accruals accounting first, considering its use in the public and private sector, before looking at historical costs and the alternative use of fair market value. The bibliography cites 8 sources.
Page Count:
7 pages (~225 words per page)
File: TS14_TEtransHCAC.rtf
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Unformatted sample text from the term paper:
the performance of an organisation, it is also a tool by which management can demonstrate responsible stewardship of the organisation and its resources regardless of whether the company is a
for profit commercial company or not for profit or public body. When accounting polices are out into place the management and accounts have choices in the methods used to
put the accounts together, however these choices are gradually diminishing as increased regulations limit the flexibility. Approaches such as the use of accruals and the historic cost conventions may both
be argued as having advantages and disadvantages when it comes to the ability to of company to give the most. The use of accruals has been gaining in popularity while
historical cost account has been diminishing. The arguments are that these movements lead to a greater level of precision and reliability at the same time as providing increased levels of
clarity for the stakeholders. By looking at these conventions the assumptions of the benefits can be assessed and potential disadvantages
identified. Accrual accounting which is also known as resource based accounting is a style of accounting that uses the matching concept; this is where expenses and income are matched to
the period in which they occur not the period in which they are paid or received. The idea is that income is matched against the relevant expenditure against so that
we see costs and benefited marched to each other; income is recorded when it is made, not when the cash is received. The result is accounts where there are no
lags. Where there are costs with not corresponding matching revenue these are included immediately. In traditional accounting the focus is on the
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