Effectiveness to Financial Accountabilities-Samples for Students

Question: Discuss about the Accounting Theory. Answer: Introduction Accountancy is science where financial transactions are recorded in a methodological manner for efficient business status. Therefore, accounting theory is a logical explanation under some guided principles that creates a framework on how accounting can be evaluated and enables development of new procedures and practices. Accounting systems are guided by these accounting theories with application of accounting knowledge and skills. In real life each and every one must have his or her own financial strategies to achieve utility satisfaction. The government plays a big role when it comes to economic growth and development as it creates the foundation of the currency flow in the economy.(Shahrokhi, 2008) accounting starts from one individual for a reasonable financial status. Individuals mostly operates with banks by depositing their savings and also acquiring loans for investment whereby accounting plays a major role by ensuring a reliable and quality accounting information to meet a credible financial status. Government evaluations and operations tend to rely heavily on accounting strategies to make decisions to stabilize their economy. (King, Beattie, Cristescu and Weetman, 2001)They set financial accounting standards boards to deal with allocation of finances and also having firms to carry out auditing and financial managements with respect to accounting theories and principles on the government revenues and e xpenditures. The government creates a platform by introducing some basic education to produce accountants with sufficient practical experience equipping them with adequate theoretical knowledge for a solid and sound reasoning when it comes financial matters in the economy. The federal government in Australia is an example of a governing institution with strategies to reform their budget. Some of economic theories focuses on; Usefulness, Qualitative characteristics/interpretational theory, assumptions/accounting structure theory Banks operates with objectives to achieve accountable services. (Watts, 1974) They are guided by accounting principles thus coming up with accounting objectives which include; Maintenance of the cash through the cash book and finding out the cash balance on any specific time in order to monitor each and every transaction in the bank, Providing some extra journals for recording non cash day to day operations for accuracy by including all expenses be it minor or major is accounted for, Having credible ledgers to account and find out the required amounts of expenses and incomes or losses and gain or payables and receivables to a have a stand on which level the bank is operating coming up with total capital at any reference cheek list in order to make sure the auditing is in a solid manner, Have cost of production calculations to have critical records between the inputs and the outputs, Assist the management panel with accounting relevant data, ratios, and report to make future predictio ns of the bank behaviour to the economy, To make clarifications about the arithmetical accuracy of the books of accounts The banks got skilled and critical knowledge accountant who are capable of achieving the above accounting objectives by providing consistent, relevant, comparable and reliable accounting information under a conceptual management framework. (Ijiri, 1968) The federal government of Australia had to perform a clear accountability on their expenditures and revenues, being guided by accounting principles so as to set a budget that is capable to increase economic development in the country. In each and every accounting strategy used the results may produce a surplus or a deficit. The government had some deficits hence they had to lay down a wise decision making on how to acquire or gain the revenue. One of the major source the government uses to acquire its revenue is through collection of taxes. Their quality characteristics and critical assumptions on their accounting strategies on how to fill the lop they introduced a levy tax to banks whereby the banks which were affected had to react b ack as their aims to achieve their accounting objectives was interfered to. A request by the bank to the government lower tax imposition and also the unhappy mood by (Mr Morrison) shows clearly that after the levy was injected to the banks their accounting would not be consistent hence relying on accounting principles on how to maintain under such environments. The federal government using precise accounting perspectives on the budget they came up with a decision to levy the banks. This was because the banks got very strong financial means or strategies to adjust when faced by a particular financial constraint. The tax revenue would pass through evaluated financial strategies following the operation of the budget in order to fulfil the required project developments and to maintain the wellbeing of each and every individual in the country.(Levy, Micco and Panizza, 2004.) Some of the issues the bank might come across include; Input of critical accounting skills on which means they should use to maintain their financial status. Some of the ways they come up with is by passing cost to the customers either by lowering the interest rates to the depositors or by increasing the interest rates of the borrowers, Also the banks which tend to behave badly to extra financial impost, the government comes up with a strategy by introducing a penalty to eas ily meet the budget projects, The banks embark itself with a competence managerial accounting workforce to usher in new ideas on how to attract customers to raise funds, The government having accountability on how the banks operate, due to competitions they are capable of predicting that the bank will source excellent means to keep its financial services to the customers friendly The government come across some issues whereby it has to address to the community concerns about the bank behaviour under well accounted arithmetic records. It also has a broader package by also playing part in sourcing government revenue with an aim of fulfilling big new promises in the budget.(Panetta, 2009) the federal government actions have affected several stakeholders such as customers who their concern is to deposit their savings for future use and borrowing loans to make investments. Due to introduction of the levy tax the initial interest on borrowing will increases to raise the funds or reduce the initial depositing rates to encourage more customers to save (Deegan, 2013). Creditors are also the stake holders who area affected by this action , creditors are organizations which fund the banks under well clearly stated financial strategies thus being forced to fund the bank with more finances to encourage the customers borrow more loans and a return with high interest they a re capable to raise the funds. The government as a stakeholder aims at providing regulations and well enabled environment to operate their business, it have to change its financial management on the banks and create means to which the bank can acquire more customers. The banks will tend to set the accounting strategies the government have used to inject a big tax to the specific banks, the banks will try to maintain its capital by using other means to raise the funds. It will come up with precise accounting measures to maintain its official standard of operation. The accounting structure theory or the classical assumption theory is one of key the theory that have motivated the banks to adhere to the action.( Hyo-Chan, 2010) The theory operate under periodicity, economic entity, monetary unit and the going concern. The periodicity will enable the banks to know its financial status on a monthly or annually basis. When it comes to economic entity we understand that activities of a business are separate from the actions of the owner thus the bank work hard to meet its objectives. Monetary unit drives the bank to dominate the financial statements in some sort of relevant numerical currency in the business. Finally the going concern motivates the bank by providing prepared financial statements assuming that the business will continue on without dissolution or threat of bankruptcy. Accountants who have adequate theoretical knowledge and sufficient practical experience manifesting accounting characteristics theory triggered the federal government to make that decision. It involves a wide usage of accepted accounting principles, logical and confirmed hypothesis. The company will have to change the pattern of accounting practices for necessary modulation and modification. Proper theoretical knowledge must be practiced in order to emerge out examinations, analysis and constant observation of decision Banks are financial institutional that make loans and receive deposits providing financial services such as currency exchange, deposit boxes and wealth management in an economy. Due to budget announcement the banks are forced to be systematic employing descriptive, evaluative and communicative theories whereby they are required to take ea ch and every transaction count that is carried out in order to have a crucial conclusion on how to stabilize the tax levy in the country. Referring to (Deegan, 2013) examples of accounting theories include; Positive accounting theory that states the contractual view of the firm bringing in appropriate accounting transactions on the real world events while normative accounting theory gives recommendation on what need to be done, Positive accounting theory enables the firm predictions on which accounting policies needed in their firms and reactions on proposed new accounting standards. Referring to the positive theory the banks tend to rely on the best accounting policies with acknowledgement to cost minimization. Descriptive theory explaining the causes and effects of day to day life. It assists us to forecast how event are treated in accounting from the study of explanations of what has been happening at a particular event. Communicative accounting theory which provide exact forecast of events giving us capability of future forecast of events. Evaluative accounting theory guides us to identify quality and quantity of any event by measuring the qualitative and quantity of the event conce rned. Inductive accounting theory examines and analyses the happenings of the past events basing on repeated experiments and inform us that similar events in future will result in similar consequences. Deductive accounting theory prepared by the method of deduction showing the future way of behaviour regarding the happening of any special phenomenon. Involving accounting strategic theories, implementation and development of accounting information provides legitimacy in generalised perceptions where the firms entail appropriate proper and desirable actions in their systems. Therefore, descriptive becomes the best theory to rely on as it describes the effects of decision made by the government to levy tax to the banks. The bank can be able to make forecast on how the event are treated in accounting be it in the long run or short run. 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