Accounting Issues

Question:

1. What accounting issues have been addressed in the article?

2. In terms of the accounting issue being discussed, what did you agree/disagree with in the article? Provide support for your argument. 

3. How does this article relate to theory/theories discussed in the Advanced Accounting unit?  Demonstrate the connection to theories. 

Answer:

1. The major accounting issue that has been addressed in the article “The Big Question of Measurement” is related to the measurement of the long-term investment. Moreover, the other major issue is related to the cash conversation cycle, statement of profit/loss and the use of OCI (Other Comprehensive Income). It is true that, in recent time, measurement has become the most controversial as well as sensitive issues in accounting. There are basically two techniques of measurement: historical cost and current value (fair value). Along with this, the major problem with the techniques of measurement is that both historical cost and fair value are opposite from each other. Moreover, the fair value requires a full update on all the variables, whereas historical cost entails intermittent as well as irregular update of the variables (Hoogervorst, 2015). As a result; both historical cost and fair value create a big difference in the valuation of the financial position or performance of an organization.

On the other hand, the other issue is related to the cash conversation cycle of the organization. This is the major accounting issue due to the historical costs and current value. For case, some people believe that historical cost is better than the fair value for the business activities that are associated with the short cash conversion cycles. Apart from this, the other people believe that for long cash conversion cycles historical cost has a propensity to be less relevant. The main reason behind it is that historical cost notifies a little about current value of an investment (Shaffer, 2011).   Moreover, the historical cost is less relevant in the longer time-span of business activities. In this way, it also has become a major controversial issue in accounting.

2. Yes, I am totally agreed with the accounting issues that are discussed in the article. There are numerous reasons behind this. For case, the major reason is that historical cost and fair value has been created a lot of differences between the value and return of the investment. Along with this, due to the big difference, investors are unable to take appropriate decisions to make their investments. They are in trouble that they should consider the historical value or fair value to accomplish the higher return. Moreover, there is not a specific criterion that organization must adopt and implement to remove this problem. The organizations are not obliged to follow a common cost for the valuation (Needles and Powers, 2010). In this way, the accounting issue related to the measurement has become a serious issue to all over the world.

Apart from this, the historical cost and fair value also created issue for the cash conversation cycles of the businesses. The main reason behind it is that business organizations and investors believe that historical costs are more effective and relevant with the short cash conversion cycles. But, they also believe that historical costs are less relevant with the long conversation cycles. In this way, the cost related to the cash conversation cycle also has become other serious accounting issue for the business organizations (Needles, Powers, and Crosson, 2010). For that reason, I am fully agreed with the accounting issues discussed in this research article.

3. This article relates to the theories that are discussed in the advanced accounting unit. For case, the article relates to the decision usefulness accounting theory of advanced accounting. The decision-usefulness theory plays a significant role in order to offer direction for all accounting as well as financial reporting choices. Moreover, as per this theory, the primary objective of financial reporting is to present information and data that is useful in order to make investment decisions (Staubus, 2013). In the same way, this research article also focuses on the fair value or current value of the assets and liabilities to comprehend the valuation of the assets. Moreover, this article also expresses that historical value may create a big difference in the value of assets and liabilities of the business organizations (Hoogervorst, 2015). Consequently, this article also describe that people show consider all the accurate financial information to make any investments in an organization.

On the other hand, the article also relates to the normative theory of   advanced accounting. For case, the normative theory describe that financial decisions of the people should not be based on the observations; but they should follow all the accounting processes or procedures before making any investments. In the same way, the article also describes financial process is essential to make any important decision (Reddy, 2004). Hence, fair value or current values have need of a full update of all the inputs at each reporting date to make any investment or financial decision. This update plays a significant role in order to provide accurate valuation of the business assets. Moreover, fair value would also be helpful to provide a meaningful picture of the financial position and performance of an entity.

In addition, the article also relevant to the positive accounting theory of advanced accounting. This theory is helpful to better understand that how accounting practices should be used. Same as, the article also helpful to expresses the importance of accounting practices to make any investment decision. The article focuses on the statement of profit & loss and other comprehensive income to recognize the cash conversation cycle in an accurate manner Fischer, Tayler, and Cheng, 2015). This research article also describes the importance of the statement of profit and loss. The main reason behind it is that P&L is a major indicator that lays a significant role in order to evaluate the financial performance of an organization in an effective and a more comprehensive manner. 

Moreover, this research article explains that if investors want to invest in an organization then they must presume all the income and expenses of the previous years in order to predict the returns on their investments. If the income or revenues are higher than the expenses then the organization is profitable for the investors. In contrast, if the expenses are higher than the income in that case the investors must avoid investing in that particular organization (Hoogervorst, 2015). In this way, it can be said that, this article discuss the major accounting issues properly. In addition to this, it is also observed that, all the concepts as well as facts described in this article are related to the theories of advanced accounting.  

References

Fischer, P.M., Tayler, W.J., and Cheng, R.H., 2015. Advanced Accounting 12th ed. Cengage Learning.

Hoogervorst, H., 2015. The big question of measurement. Available At: http://www.ifrs.org/Alerts/Conference/Documents/2015/Hans-Hoogervorst-speech-HK-Oct-2015.pdf 

Needles, B.E., and Powers, M., 2010. Financial Accounting (11th ed.). Cengage Learning.

Needles, B.E., Powers, M., and Crosson, S.V., 2010. Principles of Accounting. Cengage Learning. 

Reddy, J., 2004. Advanced Accounting: Theory & Practice. APH Publishing.

Shaffer, S., 2011. Evaluating the impact of fair value accounting on financial institutions: Implications for accounting standards setting and bank supervision. Available At: https://www.bostonfed.org/bankinfo/qau/wp/2012/qau1201.pdf

Staubus, G.J., 2013. The Decision Usefulness Theory of Accounting: A Limited History. Routledge. 

The primary purpose of referencing in an essay is to acknowledge the sources of borrowed information from someone else’s work. But following Harvard referencing and oxford referencing can be tricky sometimes, and students are often found struggling with it. If you want reliable essay writing service, choose BoomGrades.com who has some of the finest editors in the UK in its team.

Get in touch with BoomGrades.com today to get the best assignment help and writing service at the best price.

Calculate the price
Make an order in advance and get the best price
Pages (550 words)
$0.00
*Price with a welcome 15% discount applied.
Pro tip: If you want to save more money and pay the lowest price, you need to set a more extended deadline.
We know how difficult it is to be a student these days. That's why our prices are one of the most affordable on the market, and there are no hidden fees.

Instead, we offer bonuses, discounts, and free services to make your experience outstanding.
How it works
Receive a 100% original paper that will pass Turnitin from a top essay writing service
step 1
Upload your instructions
Fill out the order form and provide paper details. You can even attach screenshots or add additional instructions later. If something is not clear or missing, the writer will contact you for clarification.
Pro service tips
How to get the most out of your experience with Boom Grades
One writer throughout the entire course
If you like the writer, you can hire them again. Just copy & paste their ID on the order form ("Preferred Writer's ID" field). This way, your vocabulary will be uniform, and the writer will be aware of your needs.
The same paper from different writers
You can order essay or any other work from two different writers to choose the best one or give another version to a friend. This can be done through the add-on "Same paper from another writer."
Copy of sources used by the writer
Our college essay writers work with ScienceDirect and other databases. They can send you articles or materials used in PDF or through screenshots. Just tick the "Copy of sources" field on the order form.
Testimonials
See why 20k+ students have chosen us as their sole writing assistance provider
Check out the latest reviews and opinions submitted by real customers worldwide and make an informed decision.
Literature
Absolutely LOVE having help especially from the person who wrote this last one. THANK YOU
Customer 452529, November 19th, 2021
Classic English Literature
Absolutely LOVE the essay I received. I really appreciate it so much.
Customer 452529, October 25th, 2021
Public Health
Thank you so much !!
Customer 452589, November 28th, 2023
Exercise Science
Thank you so much for your time.
Customer 452545, December 5th, 2021
Religious studies
I recommend this service they always help. I got an A in this project thanks.
Customer 452507, October 5th, 2021
English comp
Got a 94% thank you!
Customer 452509, June 27th, 2021
world civilization
Thank you for the quick response
Customer 452509, June 27th, 2021
English 101
perfect! thanks!
Customer 452543, December 1st, 2021
Classic English Literature
Great Work as Usual. Thank you . I received an A on the paper!
Customer 452531, November 9th, 2021
Classic English Literature
Awesome Job... you are the best!
Customer 452531, November 27th, 2021
Gerontology
Thank you so much this looks great !!!!
Customer 452585, November 4th, 2023
Medicine
Great content.
Customer 452549, February 8th, 2022
11,595
Customer reviews in total
96%
Current satisfaction rate
3 pages
Average paper length
37%
Customers referred by a friend
OUR GIFT TO YOU
15% OFF your first order
Use a coupon FIRST15 and enjoy expert help with any task at the most affordable price.
Claim my 15% OFF Order in Chat