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Essay / Research Paper Abstract
This 5 page paper considers how the flexibility that remains within accounting standards allows for creative account to remain a constant temptation in the commercial environment. The writer considers the theory as well as citing actual cases in order to illustrate the points raised. The bibliography cites 5 sources.
Page Count:
5 pages (~225 words per page)
File: TS14_TEcretac.rtf
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Unformatted sample text from the term paper:
in which accounts are put together. There are many examples of choices that can be made that will effect the outcome of a set of accounts and the resulting profit
of loss. For example, deprecation may be accounted for in several ways, straight line, reducing balance, or even sum of the digits. The company also have the option at some
points to revalue assets. This choice may also be seen in the way inventory is calculated, such as first in first out, average cost, or in the US even last
in first out may be used. Then there are more subjective choices such as the capitalisation of research costs, these, under certain conditions, may be capitalised and written off over
a short period, in order to reflect the matching convention, alternatively they may be written off as they are incurred which will reduce the profits in the year of the
research, but may also be seen as reflecting the prudence concept (Elliott and Elliott, 1998). The standards that have been introduced have been brought in wit the aim of
reducing the diversity that is reflected in accounts, by creating boundaries and guidelines. However, when we look at all of the guidelines there are variations, which if all put together
may make a very large impact on results. There is a need for many company to try and maintain the same accounting policies form year to year, so that there
is a uniformity internally, even if not externally. However, a company can change policies as long as these are declared in the annual accounts (Watts, 1998). Let us consider a
company where there is a desire to increase the profits, here we may see a change in policies, for example, where research cists have always been written off they may
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