accounting theory text and readings
Download
Skip this Video
Download Presentation
ACCOUNTING THEORY: TEXT AND READINGS

Loading in 2 Seconds...

play fullscreen
1 / 19

ACCOUNTING THEORY: TEXT AND READINGS - PowerPoint PPT Presentation


  • 121 Views
  • Uploaded on

ACCOUNTING THEORY: TEXT AND READINGS. RICHARD G. SCHROEDER MYRTLE CLARK JACK CATHEY. CHAPTER 1. THE DEVELOPMENT OF ACCOUNTING THEORY. Introduction. What is theory?. Webster defines theory as:

loader
I am the owner, or an agent authorized to act on behalf of the owner, of the copyrighted work described.
capcha
Download Presentation

PowerPoint Slideshow about 'ACCOUNTING THEORY: TEXT AND READINGS' - betty_james


An Image/Link below is provided (as is) to download presentation

Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author.While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server.


- - - - - - - - - - - - - - - - - - - - - - - - - - E N D - - - - - - - - - - - - - - - - - - - - - - - - - -
Presentation Transcript
accounting theory text and readings

ACCOUNTING THEORY: TEXT AND READINGS

RICHARD G. SCHROEDER

MYRTLE CLARK

JACK CATHEY

chapter 1

CHAPTER 1

THE DEVELOPMENT OF ACCOUNTING THEORY

introduction
Introduction
  • What is theory?
    • Webster defines theory as:

“Systematically organized knowledge, applicable in a relatively wide variety of circumstances, a system of assumptions, accepted principles and rules of procedure to analyze, predict or otherwise explain the nature of behavior of a specified set of phenomena.”

    • Normative theory
    • Positive theory
  • Why is the development of a general theory of accounting important?
  • What is the relationship of accounting research to accounting theory?
the early history of accounting
THE EARLY HISTORY OF ACCOUNTING
  • The Zenon Papyri
  • The impact of the Renaissance
    • Fra Luca Pacioli
  • The evolution of joint ventures into ongoing businesses
  • The impact of the industrial revolution and the progressive movement
  • The concept of capital maintenance
  • The accountant as a protector of business interests
accounting in the united states since 1930
ACCOUNTING IN THE UNITED STATES SINCE 1930
  • Meetings between NYSE and AIA
  • AAA
  • SEC
    • Securities Act of 1933
    • Securities Exchange Act of 1934
  • Committee on Accounting Procedure
  • Accounting Principles Board
  • Financial Accounting Standards Board
the accounting principles board
THE ACCOUNTING PRINCIPLES BOARD
  • Formation and structure
  • Types of pronouncements
    • APB Opinions
  • The flap over accounting for the investment tax Credit
  • Rule 203
  • Criticism of the APB
the financial accounting standards board
THE FINANCIAL ACCOUNTING STANDARDS BOARD
  • The Wheat Committee
  • The Trueblood Committee
  • The FASB was established
  • The structure of the FASB is illustrated in the following diagram
structure of the fasb

Financial

Accounting

Foundation

Board of

Trustees

Electors

Financial

Accounting

Standards

Advisory

Committee

(approx.

20 members)

Financial

Accounting

Standards

Board

(7 members)

Task Forces

of the

Standards

Board

Admin. Staff

Research Staff

Structure of the FASB

Appoint and

fund

Govern

Appoint

- - - - - - -

|

|

|

Appoint and

fund

Appoint

slide9
FASB
  • Mission
  • Types of pronouncements
  • Statements of Financial Accounting Concepts
  • Statements of Financial Accounting Standards
  • Interpretations
  • Technical Bulletins
slide10
FASB
  • Emerging Issues
  • Standards Overload
  • Standard setting as a political process
  • Economic Consequences
slide11
GAAP
  • Evolution of phrase:
    • Changed wording of auditor’s certificate brought about by meetings between NYSE and AIA
    • The APB’s definition
    • The Auditing Standards Executive Committee’s definition
  • The current sources of GAAP consist of four levels described as A, B, C, and D by Statement of Auditing Standards No 69
gaap hierarchy
GAAP Hierarchy
  • LEVEL A:
  • FASB Statements
    • FASB Interpretations
    • SEC Rules and Interpretive Releases
    • Accounting Principles Board Opinions (unless amended)
    • Account Research Bulletins (unless amended)

LEVEL B:

FASB Technical Bulletins

AICPA Industry Audit Guides that have been reviewed by the FASB

gaap hierarchy1
GAAP Hierarchy

LEVEL C:

AcSEC Practice Bulletins that have been reviewed by the FASB

Consensuses reached by the EITF

LEVEL D:

AICPA Accounting Interpretations (no longer issued)

FASB Implementation Guides

Other widely recognized or prevalent accounting practices

the business reporting research project
The Business Reporting Research Project
  • Steering Committee
  • Working Groups
the role of ethics in accounting
THE ROLE OF ETHICS IN ACCOUNTING
  • The public accountant as a watchdog
accounting in crisis the events of the early 2000s1
Accounting in Crisis – The Events of the Early 2000s
  • Two major changes in the accounting profession have taken place in the wake of the accounting scandals:
    • Arthur Andersen
    • formerly one the Big 5 audit firms
    • has gone out of business
  • Sarbanes-Oxley Act
  • President Bush signed into law July 2002
  • imposes a number of corporate governance rules on publicly traded companies (Discussed in Chapter 17).
international accounting standards
International Accounting Standards
  • The concept of harmonization
  • The IASB
  • The IASB’s objectives:
    • To formulate and publish in the public interest accounting standards to be observed in the presentation of financial statements and to promote their worldwide acceptance and observance
    • To work generally for the improvement and harmonization of regulations, accounting standards, and procedures relating to the presentation of financial statements.
  • 41 Statements of Accounting Standards and 5 Statements of Financial Reporting Standards to date
ad