Financial Accounting Theories: Questions and Answers

Financial write up Theories Questions and AnswersIn the nature of possibleness, a positive scheme of bill or imperious bill Theory is a descriptive system, which describes bulgeicular aspects of pecuniary bill use. It seeks to predict, observe, and explain which score system method actings accountants lead or will not use in particular circumstances and why managers and/or accountants choose to adopt particular news report methods in preference to some others. While a normative theory of account is a prescriptive theory, which consec pastures how bill should be undertaken. It generates guidance about what accountants should do. It seeks to tell accountants which history method in example is the about efficient or equitable attend and hence, which accounting method accountants should use.In the concept of theory, a positive theory of accounting is develop through inductive reasoning that is, through observations. The theory genuine is establish on observant what accountants do. While a normative theory of accounting is developed through deductive reasoning that is, system of logical reasoning. The theory developed is establish much on the use of logic that is, what accountants should do quite an than observation.If a normative theory of monetary accounting has been developed to prescribe how we should do monetary accounting, is it possible that we privy decide to reject the theory because we do not with agree with a central assumption of the theory (such as an assumption about the objective of financial reporting), but at the same time decide that the theory is nevertheless logical? pardon your answer.Yes, we can reject a theory even that the theory is logical. For instance, the corking markets that we use as an assumption ar efficient. Besides that, persons atomic number 18 motivate by self-interest bind together with the wealth maximization. It ability course us to make particular prescriptions about what instructio n organizations should produce. Self-interest federal agency a core belief about what motivates individual action. However, we exponent ingest that the prescriptions plyd by the theory are unsound and potentially even shun impact to particular groups within society if we reject these assumptions. In short, we might even to believe that the theory is logically developed.Is the study of financial accounting theory a float of time for accounting students? Explain your answer.In my opinion, the study of financial accounting theory is not a waste of time for accounting students. In fact, it is important for accounting students to study and envision financial accounting theories. This is because accounting theories aim to provide a pellucid and systematic frame hightail it for investigating, understanding and/or evolution various accounting practices. The evaluation of individual accounting practices is likely to be much more effective if the person evaluating these practices has a thorough grasp of accounting theory. Without a thorough theoretically informed understanding of accounting, it is difficult to valuate the suitableness of current accounting practices, to develop improved accounting practices where current practices are unsuitable for rapidly changing concern situations, and to defend the reputation of accounting where accounting practices are wrongly blamed for causing companies to fail. Hence, the insights from a varied lean of accounting theories are essential to the process of continual gain in financial accounting practices.In channelition, students of financial accounting will also be necessary to learn how to construct and read financial statements prepared in conformity with various accounting standards and other original and statutory requirements. In their working life, whether or not they choose to destine in accounting, they could be involved in such activities as analyzing financial statements for the purpose of making par ticular decisions, compiling financial statements for others to read, or generating accounting guidance or rules for others to follow. As such, the better they understand the accounting practices fundamental these various activities, the more effective they are likely to be in performing these activities and therefore, the better equipped they are likely to be to pursue in their chosen life story.Explain the meaning of the following paragraph and evaluate the logic of the perspective describedIn generating theories of accounting that are based upon what accountants actually do, it is assumed (often implicitly) that what is done by the majority of accountants is the most tolerate practice. In adopting such a perspective there is, in a sense, a perspective of accounting Darwinism a view that accounting practice has evolved, and the fittest, or perhaps best, practices view survived. Prescriptions or advice are provided to others on the earth of what most accountants do, the log ic being that the majority of accountants must be doing the most appropriate thing.From approximately the 1920s to the 1960s, theories of accounting were normally developed on the base of operations of observation of what accountants actually did in practice. They were developed by the process referred to as sense. This can be contrasted with a process wherein theories are developed by deductive reasoning which is based more upon the use of logic rather than observation. Besides, returning to the use of observation to develop worldwideisable theories is based on the common practices which were codified in the form of conventions of accounting after observing what accountants did in practice.These b lay out ones of the theories were adopted by Notable theories, which careful observation of accounting practice revealed patterns of consistent behaviour. For example, it could be notice that accountants tended to be very careful in measuring both revenues and expenses. Where judgeme nt was necessary it was observed that accountants ordinarily underestimated revenues and overstated expenses. The result was a orthodox measure of profit.Similarly, it could be observed that accountants be sportd as if the value of money, which was the unit of account, remained constant. These observations of accounting practice led to the locution of a number of hypotheses such as that where judgement is needed, a conservative procedure is adopted and that it is assumed that the value of money remains constant. These hypotheses were substantiate by many observations of the behaviour of accountants.While there was a general shift towards prescriptive research in the 1960s, some research of an inductive nature still occurs. Research based on the inductive approach has been subject to many criticisms. For example, Gray, Owen and Maunders (1987, p. 66) state that studying extant practice is a study of what is and, by definition does not study what is not or what should be. It there fore concentrates on the status quo, is reactionary in attitude, and cannot provide a basis upon which current practice may be evaluated or from which future day improvements may be deduced.What role do determine judgments have in determining what particular accounting theory a researcher might elect to adopt to explain or predict particular accounting phenomena? prise judgements have a major power to make with what theory a researcher might elect to use to explain or predict particular phenomena. These indicate that, we must consider the particular accounting theory researchers might use to explain the companies elect to produce discipline about their sociable and surroundal mental process. In case, I believed that company managers are motivated by self-interest. At that time, I would embrace a Positive Accounting Theory. A Positive Accounting Theory has self-interest as one of the fundamental assumptions about what drives human behaviour. These people would have a trend toward s believing that all human activity. The activities include the disclosure of favorable and environmental information. This means that, it is undertaken to the limits that the activity can be related endorse to positively impacting the managers wealth.Besides, it typically requires people of current generations to offer current pulmonary tuberculosis to extent it is in the interests of future generations if I was a researcher who holds a vision of sustainable development. In this way, I would reject Positive Accounting Theory as self-interest and sustainable development are to reciprocally exclusive. For example, researcher would embrace another theoretical perspective such as legitimacy theory. However, there are no researchers in the area of social and environmental accounting enfolds Positive Accounting Theory although it is interesting to situation that. attach and Spencer Human vision Managementtag and Spencer Human Resource Management connection ProfileMS made a lower-ra nking beginning as a single market stall and have grown to become one of the UKs leading retailers of clothing, food, home products and financial services. MS employs 68,000 employees over 30 countries, has more than 500 stores and cater tens of millions of customers each and all week.MS is committed to provide superior quality products and that too at attr vigorous prices. MSs turnover is 8 billion.ValuesSuccess story of MS has been built on a number of core company values that have remained almost unchanged. These values areQuality Delivering excellent standards consistently.Value Delivering exceptional value to customers.Innovation Need to continue to be at the forefront of innovation in both general merchandising and food. conceive The most trusted retailer. MS have a proud heritage of staff welfare, customer care and involvement in the community.Service They are committed to deliver the best services to customers.Valued Employees contribution to the personal line of credit is remunerateed.Fairly treated Employees are respected and valued, whoever they are.Proud Employees take self-esteem in everything they do.Committed To delivering great customer service.Involved Employees are informed of new developments and kept up-to-date with the progress of the company.Challenged Employees challenge each other constructively every day and work at full potential.From the in a higher place mentioned points it is clear that quality of Human Capital at MS forms the basis of their values.Its all about creating a working environment that encourages people to add to their skills, and where theyre provided with everything they need to achieve their potential.(Belinda, HR maneuver, MS)HR Policies and RulesService RulesPromotion constitution RulesAny opportunities for promotion are open to all and depend on ability, skills and experience.Wage Structure individually personal credit line is positioned within a reward level according to level of responsibility and mark et value. This enables MS to declare oneself competitive salaries for each job taking into account market rates. vantage everyone according to their contribution.Payment is by BACS (Bankers Automated Clearing System) so it goes true(a) into employees account.How pay is calculatedIf a person is on an hourly rate of pay, monthly pay is calculated as follows break in administered employees(Hourly rate x minimum agreed weekly committed hours x 52.25)/12Head Office administered employees(Hourly rate x minimum agreed weekly committed hours x 52)/12For those on an annual profits, the calculation isAnnual salary/12* The Company reserves the decent to suspend pay where an employee fails to communicate about absence from work.Employee motivation welfare schemesReward Policies label Spencer believes in sharing its progress and profitability and reward accordingly. They offer a range of benefits which are service-related, so they build up as service of an employee increases. Each element of the benefits package is reviewed regularly to ensure it remains competitive and maintains Marks Spencer as a leading employer. Some of them areEmployee Discount machine tout ensembleowance healthcare rendersMS offers following healthcare options to all monthly paid employees and their partnersPrivate health indemnityDental plan insuranceHospital Saving Association (HSA).Travel ExpensesTravel is an integral part of work for many people. Marks Spencer offers trigger options and expenses so employees can travel in a secure and comfortable manner.Social ActivitiesThe Company provides a grant each year for sports and social activities which are organised at communication channel unit/store level.FreesharesSharesave SchemesSharesave allows to save tax-free for three to cardinal long time and at the end of that period employee can buy Marks Spencer shares at a specially discounted price.Season Ticket LoansCateringThey provide a subsidised catering service for all employees.Lif estyle OptionsMS provides following options and benefitsFlexible working Including a range of optionspart-time working, job sharing, term-time workingUnpaid special leave up to nine months. If an employee have devil years continuous service and the timing fits with the operation of the business , he can take up to nine months unpaid leave. salaried special leave In case of serious personal difficulties, e.g. where a child is hospitalized.Unpaid leave up to 48 hours.Political appointments If an employee has a minimum of five years service, a break of five years is available for all who are wishing to become candidates for any UK or European parliament or assembly.Public duties/involvement in local anaesthetic community In case of any other public duties to attend, an employee can speak to his line manager for adjustments.Justice of the Peace or domesticate governor If an employee intends to become, a Justice of the Peace or school governor, adjustments are made in the worki ng hours.Armed Forces Volunteer Services Offer a period of paid leave to volunteers and ex-service men and women who are required to go on annual training exercises.Confidential sustainline A 24-hour surreptitious support service which help employees to manage stress, personal, traumatic or financial issues which are affecting their attendance or performance at work.Maternity, Adoption, composition and Parental Leave entitlements.IVF Provide support if an employee or his/her partner is having IVF treatment. foster Support is provided if an employee is considering to become a foster parent. health sentry go rulesMS is committed to ensure the health, fullty and well being of all its employees, customers and others who anticipate or work in their premises.MS Policy on Health and Safety includesThe Health Safety CommitteeIt advises on health safety policy, monitors its effectiveness and reviews key performance measures on a quarterly basis. The information is provided by th e Fire, Health Safety Officer Network Groups which also act quarterly. Information from each location is exchanged with Fire, Health Safety Officers at Business Involvement Group Meetings (BIG).The Store/Site ManagerThe Store/Site Manager is trusty for ensuring with Fire, Health Safety Officer that Company Health Safety Policy is implemented. This includesSuitable Induction and Legislative update training for Fire, Health Safety.The prevention, investigation and the reporting of accidents.The completion of ongoing pretend Assessments and maintenance of known hazard information.The Fire, Health Safety Officer (FHSO)He assists the Managers and works closely with the Central Retail Operational Support Fire, Health Safety team.Business Involvement Groups (BIGs)It represents all employees in a two way communication. They discuss health safety policy, performance and implementation as an agenda item at each meeting and update the business through the FHSO Networks.Retail Operat ional Support GroupThis group is liable for determining and monitoring the Fire, Health Safety Risk Assessments, work practices and enforcement measures.Property, culture and Facilities ManagementThey are responsible for the provision of working areas, equipment and materials that are safe and dont pose any risk to health.Occupational Health Services to a lower place this, they provide advice and support to line managers on managing the impact of work on health, and health on work.It creates to safe, secure and pleasant working environment for employees. genteelness and developmentPersonal DevelopmentLearning career developmentMS is committed to develop its employees into skilled, customer-focused, enthusiastic and motivated employees. They do this through training, developing the necessary skills and knowledge to perform effectively and fulfill potential. An employee is equally responsible for tuition and development. One should actively identify training and development need by recognising strengths and weaknesses.Proper formal training consisting of coaching and practical on the job experience, supported by a widerange of learning resources is provided. cultivation is given as and when required e.g. the implementation of new systems.Employees with disabilitiesMS help incapacitate employees to realise their full potential and provide them with the same career prospects and promotional opportunities that are available to all employees. In addition, they are provided with the retraining, reclamation and reasonable adjustments for those who become disabled during the course of working life.Review of performanceLine managers review performance continually in order to prize how a particular employee is doing. It helps employee in assessing themselves and look for further development.Managing DiversityMarks Spencer have a diverse range of employees and are committed to an active Equal Opportunities Policy. This doesnt just cover recruitment and selecti on procedures, but runs right through training and development, appraisal, promotion opportunities and eventually to retirement.MS is highly dedicated and committed to promote an environment free from discrimination, harassment and victimisation and work hard to ensure everyone is offered equality of opportunity to achieve their full potential. All the decisions are objective, free from bias and based solely upon work criteria and individual merit.Highlights of Equal Opportunities Policy arePromote a working environment free from discrimination, harassment and victimisation on the basis ofgender, sexual orientation, married or civil partnership status, gender reassignmentrace, colour, themeity, ethnic or national origin,hours of workreligious or political beliefsdisabilityage able concern is shown towards individuals personal circumstances and the needs of the business in order to find solutions to such issues. Reasonable adjustments are made to ensure that disabled workers or appl icants are not placed at a substantial disadvantage by a practice or policy that exists at MS. Proper help is provided to people with disability or who have learning difficulty to complete the application process online and also in speech sound assessment.