Accounting Theory and Practice

QUESTION 1 – Question 1.eight:
What is the distinction between creating a concept by induction and creating a concept by deduction?

QUESTION 2 – Question 1.9:
Is the study of monetary accounting principle a waste of time for accounting students? Explain your answer.

QUESTION 3 – Question 1.26:
Would you reject as ‘insignificant and useless’ a optimistic theory of accounting on the idea that in a specific analysis examine the results derived didn’t assist the hypotheses and the related theory? Explain your answer.

QUESTION 4 – Question 1.27 (NEW):
The International Accounting Standards Board has numerous roles, including formulating accounting standards and creating a conceptual framework.

Is the work they do in developing an accounting standard or the conceptual framework normative or constructive in nature?

QUESTION 5 – Question 1.33 (NEW):
In this chapter we provided quotes from Gray, Owen and Adams (2010), by which they discuss an apparent herding phenomenon that appears to be occurring in respect of the choice and use of specific theories. They state, ‘there has been an odd herding tendency, especially around legitimacy theory’, in addition to stating that they ‘also have a sneaking feeling that institutional theory could also be coming up fast as the following theory around which to herd’.

What do they mean by this apparent follow of ‘herding’, and what are some potential advantages and downsides that are related to this practice?

QUESTION 6 – Question 1.35 (NEW):
Do we actually want financial accounting concept if all we are excited about doing is growing accounting standards?

TUTORIAL 2 – Semester 2 2014

Deegan Topics 2 and three:
The monetary reporting surroundings and Regulation of financial accounting

QUESTION 1 – Question 2.

Do you believe that the media portray accounting numbers, such as profits, as some kind of ‘hard’ and goal efficiency indicator? Why do you think they may do that, and, in the occasion that they do, what are some of the implications which may arise on account of this approach?

QUESTION 2 – Question 2.7:
Is it appropriate to have a look at modifications or developments in company earnings over time without making any adjustments? Explain your answer.

QUESTION 3 – Question 2.14:
If regulators acted in accordance with predictions provided by the personal interest theory of regulation, which assumes that every one people (including politicians and regulators) are motivated by their own economic self-interest, what is the probability of the introduction of laws aimed toward lowering the problems related to local weather change – significantly if business corporations opposed such regulations?

QUESTION 4 – Question 3.7:
Is regulation more prone to be required in respect of public goods than other goods? Why?

QUESTION 5 – Question 3.30:
Accounting headline three.9 (SEE END OF TUTORIAL 2 QUESTIONS) discusses how European banks were capable of lobby the European Union (EU) so as to be regulated by a ‘watered down’ model of the accounting normal IAS 39. Explain whether or not the decision of the EU to embrace a ‘watered down’ model of the usual is according to a ‘public curiosity theory of regulation perspective’, or whether it may be explained by an alternate theoretical perspective (which you should attempt to identify).

QUESTION 6 – Question 3.35:
Let us assume that the federal government has become involved that current disclosure regulation tends to fixate on the monetary efficiency of organisations however fails to deal with different features of company performance, including a failure to supply details about corporate social and environmental impacts as nicely as about numerous initiatives and investments an organisation has undertaken to enhance its social and environmental efficiency. As such, the federal government has decided to introduce legislation that will require business firms to supply information about the social and environmental impacts of their operations, in addition to the social and environmental initiatives undertaken by the companies.

You are required to do the following: (a) Explain from a public curiosity principle perspective the rationale for the government introducing the legislation and how the federal government will ultimately assess whether or not any proposed legislation should actually be launched. (b) Predict from a seize theory perspective the kinds of constituents that will benefit in the lengthy run from any social and environmental disclosure legislation. (c) Predict from an financial curiosity group theory perspective whether or not any potential laws to be launched will result in a rise in the accountability of companies in relation to their social and environmental performance despite any implications that this increased company accountability might need for the financial success of huge however heavily polluting organisations.

TUTORIAL 3 – Semester 2 2014
Deegan Topics 4 and 5:
International accounting and The conceptual framework project

QUESTION 1 – Question 4.19:
It is often argued that the accounting requirements of the FASB are rule-based, whereas the accounting standards issued by the IASB are principles-based. Rules-based standards by their nature could be fairly advanced, notably in the event that they seek to cowl as many situations as potential. Do you think it will be simpler to avoid the necessities of rules-based or principles-based accounting standards?

QUESTION 2 – Question four.22:
Does the standardisation of accounting standards on a world basis necessarily equate with a standardisation in accounting practice?

QUESTION 3 – Question four.25
In considering the relevance of IFRS to developing international locations, Chand and White (2007, p.606) state: (see below). Explain the explanations behind Chand and White’s declare. “While the forces of globalization and convergence are shifting accounting practices in the direction of a unified, or a minimal of, harmonized regulatory framework for financial reporting, this is unlikely to best serve the diverse interests of disparate person groups of economic reviews.”

QUESTION 4 – Question four.27:
Ball (2006, p. 17) makes the next comment: (below). Explain the basis of Ball’s feedback. “In sum, even a cursory evaluation of the political and economic variety amongst, IFRS-adopting nations, and of their past and current monetary reporting practices, makes the notion that uniform standards alone will produce uniform monetary reporting seem naïve.”

QUESTION 5 – Question 4.30 (NEW)
In continental European international locations, prior to the adoption of IFRS, the home accounting rules had been sometimes rather more aligned with native taxation regulation than would be the case in countries just like the United States, the United Kingdom, Canada, Australia or New Zealand. Why do you think this might have been the case?

QUESTION 6 – Topic 5: Question 6.7:
Conceptual framework tasks identify numerous qualitative criteria that financial data should possess if it is to be useful for financial decision making. Two such attributes are neutrality and representational faithfulness? Do you believe that financial information can, in reality be neutral and representationally faithful? Explain your reply.

QUESTION 7 – Topic 5: Question 6.10:
The two primary qualitative traits that financial data should possess have been identified as relevance and reliability. Is yet one more important than the other, or are they equally important? TUTORIAL 4 – Semester 2 2014

Deegan Topic 6:
Chapter 10: Reactions of capital markets to monetary reporting

QUESTION 1 – Question 10.4 (NEW):
What is an event examine and why would an event examine be of relevance to an accounting standard-setter?

QUESTION 2 – Question 10.9 (NEW):
If people have access to insider information and are able to make giant gains on a securities market because of using info that isn’t extensively identified, then is that this a sign that the market is inefficient?

QUESTION 3 – Question 10.16 (NEW):
Evidence reveals that share prices might not totally react to financial accounting info immediately and that abnormal returns might persist for a time period following the discharge of knowledge (a case of ‘post-announcement drift’). Does this indicate that securities markets are not efficient and that assumptions about market efficiency ought to be rejected?

QUESTION 4 – Question 10.17:
If an organisation’s operations rely closely on the specialised expertise of its administration staff, would you anticipate there to be the next or a lower correspondence between the net property recognised within the statement of monetary position (balance sheet), and the entire market worth of the organisation’s securities, relative to an organisation that relies extra on tangible belongings (for example, generally used plant and machinery) to generate its income?

QUESTION 5 – Question 10.24:
Refer to Accounting Headline 10.3 (SEE END OF TUTORIAL 4 QUESTIONS) and clarify why traders might have reacted to the false rumour. Is the reaction of traders to this false rumour according to the view that the capital market is environment friendly or inefficient?

QUESTION 6 – Question 10.25:
Review Accounting Headline 10.7 (SEE END OF TUTORIAL four QUESTIONS) and explain the reason for the change in the price of Wesfarmers shares. Also, what might have triggered the worth modifications within the shares within the other retail organisations?

QUESTION 7 – Question 10.28:
Read Accounting Headline 10.10 (SEE END OF TUTORIAL 4 QUESTIONS) and, relying on some of the capital markets studies thought-about in this chapter, clarify why the share costs of the pharmaceutical companies may need reacted in the way they did.

TUTORIAL 5 – Semester 2 2014

Deegan Topics 8 and 9: Accounting for Corporate Social Responsibilities

QUESTION 1 – Question eight.1:
Explain the notion of a social contract, and what relevance the social contract has with respect to the legitimacy of an organisation.

QUESTION 2 – Question eight.7:
If a company was involved in a major accident or incident, would you expect it to make use of vehicles such as an annual report or a sustainability report to try to clarify the incident? If so, explain how and why it will use reports in this method.

QUESTION 3 – Question 8.21 (NEW):

Chapter 8 divided Stakeholder Theory into the moral branch and the managerial branch. Explain the differences between the 2 branches when it comes to the alternative views about when info will, or should, be supplied by an organisation.

QUESTION four – Question 9.1:
What has the setting obtained to do with accounting (NEW)?

QUESTION 5 – Question 9.9:
What is an externality, and why do monetary accounting practices typically ignore

QUESTION 6 – Question 9.20 (NEW):
Explain what is meant by the next assertion:
…In the lengthy run, environmental sustainability is important for each social and financial sustainability, so consideration to minimising impacts in respect of the environment is critical to make sure a sustainable social and financial future.

QUESTION 7 – Question 9.35 (NEW):
What is a cap-and-trade system and what accounting issues does it create?

What is worldwide integrated reporting and how does it differ from the present financial reporting system we now have. TUTORIAL 6 – Semester 2 2014

Topic 7: Positive accounting theory

QUESTION 1 – Question 7.5:
Explain why a choice made in London by members of the International Accounting Standards Board and integrated within an accounting normal may influence the enterprise working strategies employed by a supervisor in Melbourne, Australia.

QUESTION 2 – Question 7.10:
As a part of efforts to develop a revised Conceptual Framework for Financial Reporting, the IASB is currently investigating different approaches for measuring the assets and liabilities of reporting entities. In relation to asset measurement it appears that truthful worth is a favoured choice of the IASB. In this regard, would researchers who embrace the view that accounting plays a significant role in reducing the contracting costs of an organisation favour the adoption of truthful worth in all situations? Carefully clarify your reply.

QUESTION three – Question 7.12:
Would managers who’ve negotiated debt contracts with accounting-based covenants based mostly around ‘rolling GAAP’ be relatively more more probably to lobby an accounting standard-setter a few proposed accounting normal than would a supervisor from a firm who has negotiated accounting-based debt covenants that use ‘frozen GAAP’. Why or why not? Illustrate utilizing AASB2 Share Based Payments and assume that it is the 12 months 2003.

QUESTION four – Question 7.15:
Do you assume the policy selections made by members of the International Accounting Standards Board would or should give consideration to the insights provided by Positive Accounting Theory? Why?

QUESTION 5 – Question 7.17:
If senior managers inside a company had been rewarded by the use of accounting-based bonus plans then would they, or the owners/shareholders (or both), prefer using conservative accounting methods? Explain the reasoning in your reply.

QUESTION 6 – Question 10.22
Accepted assumptions about market efficiency imply that it is the information content material of disclosure, and never the type of the disclosure, that’s valued by the market. Therefore it should not matter whether data is disclosed throughout the notes to the monetary statements, or within the monetary statements themselves. If this is true, then why would managers care if one thing – such as a lease legal responsibility – is disclosed solely in the notes, or included within the liabilities disclosed throughout the balance sheet?

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