CHAPTER 1 Contemporary issues in accounting LEARNING OBJECTIVES After studying this chapter, you should be able to: 1.1 reflect on the nature of accounting and the role of accountants 1.2 define 'theory' 1.3 reflect on why theory is needed and appreciate the need to evaluate theories 1.4 understand the nature of research and its relationship to theory 1.5 identify some of the research areas in accounting 1.6 understand the case study approach and the steps to take in answering case study questions. Copyright @ 2017. Wiley. All rights reserved. Rankin, Michaela. Contemporary Issues in Accounting, 2nd Edition, Wiley, 2017. ProQuest Ebook Central, http://ebookcentral.proquest.com/lib/swin/detail.action?docID=5049576. Created from swin on 2021-03-05 22:55:39.
Copyright @ 2017. Wiley. All rights reserved. Nature of accounting Accounting problem or issue Professional judgement Output - information for decisions 2 Contemporary issues in accounting Consider GAAP not absolute - derived from political process No black/white rules - principles- based standards Lags behind changes in real world Impact of technology Theory Technical knowledge Research Critical analysis Rankin, Michaela. Contemporary Issues in Accounting, 2nd Edition, Wiley, 2017. ProQuest Ebook Central, http://ebookcentral.proquest.com/lib/swin/detail.action?docID=5049576. Created from swin on 2021-03-05 22:55:39.
This text, as its title indicates, considers some of the contemporary issues in accounting. Its key focus is on issues in financial accounting. Financial accounting can be defined as the regular reporting of the financial position and performance of an entity through financial statements issued to external users. This definition is relatively straightforward but financial accounting is neither straightforward nor simple. As this text shows, the influences on financial accounting are many and complex, and often the application of financial accounting principles and practices in specific contexts brings unique challenges. Accounting is often cited as the 'language of business' and financial accounting provides much of the public information about business (and non-business) entities that people rely on to make decisions. If the financial accounting information provided is not 'right', this can have significant adverse consequences for not only shareholders but also the public, the managers of businesses and accountants themselves. Even a brief look at well-known business failures (such as Enron, WorldCom, HIH, One.Tel and the global financial crisis) confirms this. Some accounting students may question why there are issues or problems in accounting that are dif- ferent from those in the past. After all, the basic building blocks of accounting - the debit and credit rules - have not changed for centuries. Perhaps any problems that have occurred, and related accounting failures, are simply due to a misapplication of accounting rules; that is, the 'right' accounting was not followed. While it is acknowledged that inappropriate or even improper accounting has played a part in many corporate failures, this is too simplistic a view of accounting and the role of accountants. 1.1 The nature of accounting and the role of accountants Copyright @ 2017. Wiley. All rights reserved. LEARNING OBJECTIVE 1.1 Reflect on the nature of accounting and the role of accountants. First we need to consider the nature of accounting. Accounting is not