Accounting regulations
What are accountants trying to describe with an income number? (i.e., discuss alternative concepts of income)Income reporting is used for the measurement of management efficiency, estimation of business future performance and future dividend distribution. Furthermore, it is used to measure the accomplishment and as a guide to future managerial decisions. Typically, accountants describe income numbers as the surplus effect from business activity, resulting from the cash cycle of business operation. The surplus is arrived by matching the revenues against the related expenses of an entity within an accounting period as stated in Statement of Accounting Concepts 4 (SAC 4). Income is also known as surplus after maintaining the value of capital as a whole. A broad prospect of an accountants' description of income, can be either a semantic or pragmatic approach. The semantic description of income relates to the economic concepts of income, is more often referred and credited to the economist, J. R. Hicks (1946, p. 172) who thinks that income is the maximum value which a person can consume during a week and still expect to be as well off at the end of the week as he was in the beginning. Economists define income
It is probable that the synchronization with international standards would classify income without much amendment, but methods of reporting income would change. 1961, 'The Basic Postulates of Accounting', Accounting Research Study, No. , 1969) His theory is consistent with the development of the Efficient Market Hypothesis. 5) Classification and Disclosure of Revenues and Expenses. 1) adopts the all-inclusive concept of profit whereby the profit and loss statement includes revenues, expenses, gains and losses from all sources. Conclusively, the concepts of income allow accountants to describe income that if applied generally to majority of accountants within a country, would constitute the laws for accounting. Van Breda 1992 'Accounting Theory' 5th edn, Irwin/McGraw Hill2. This concept includes revenues, expenses, gains and losses from all sources with the exception of extraordinary items. Thus this ultimately indicates that income number is useful and informative.
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