The Need for Accounting Standards

Recommendations 6 References 7 1. Introduction This report briefly introduces the current financial position of Revive Marketing, and discusses the reasons behind these financial data. The main issue discussed in this report is why an improvement of profit has been noticed during the accounting period while cash position has not been increased. This report contains information that is calculated under accrual accounting principle. Because all transactions are recorded at the time when they are made rather than when actual money has been made or received, there is a likelihood that transactions are shown on one accounting period but actual change has not be made it, and it may deliver biased information about the company’s true financial position.

(2013, January 1). Principles of Accounting. Retrieved May 8, 2014, from http://www.principlesofaccounting.com/chapter8/chapter8.html Siegel Ph.D. CPA, Joel G.; Shim Ph.D., Jae K. (2010-02-01). Dictionary of Accounting Terms (Barron's Dictionary of Accounting Terms) (p. 129). Barron's Educational Series.

"General Accepted Accounting Principles or GAAP: What Does It Mean?" LegalZoom. LegalZoom, n.d. Web. 10 May 2014. running-your-business/general-accepted-accounting-principles-or>.

In the financial department of every company different kind of data and report to provide the information needed is used. Without that information financial manager, investors and bankers would be flying blind (Block, Hirt 2005). Those are not all the groups of interest about the financial information; we also have the government (for taxes purposes), general public (for investment opportunities), the competition and the operational areas to determinate their performance. In finance there is three basic kinds of financial statements, the income statement, the balance sheet, and the statements of cash flow. The income statement is made for measuring the profitability of a firm over period of time.

2, pp. 141-161, viewed 30 April 2014, Wiley Online Library Database, DOI 10/1111/1467-6281.00027 Paul, B & Miller, W 1985, ‘The conceptual framework: myths and realities’, Journal of Accountancy, vol. 159, issue. 3, p. 62, ProQuest Central Database, viewed 30 April 2014 Peasnell, KV 1982, ‘The function of a conceptual framework for corporate financial reporting’, Accounting & Business Research, vol. 12, issue.

Retrieved May 28, 2014, from http://highered.mcgraw-hill.com/sites/0072396881/student_view0/chapter6/chapter_summary.html Principles of Accounting. (n.d.). Principles of Accounting. Retrieved May 28, 2014, from http://www.principlesofaccounting.com/chapter5/chapter5.html Single-Step Income Statement | AccountingCoach. (n.d.).

Even though “now” banks and building societies look much alike, they used to be completely different types of financial institutions. For this reason, I will point out the differences and similarities as we go along the historical process through which these two, once utterly distinct, types of financial institutions started to look the same. First of all, we need to stress the main difference which distinguishes banks from building societies, and that is their ownership structure. Banks are private limited companies(p.l.c) whilst building societies are mutual organizations. Banks are profit oriented companies and they are usually listed on the stock market.

(2015). 4 Activity Based Cost Systems for Management. [Online] Academia.edu. Available at: http://www.academia.edu/3882382/4_Activity_Based_Cost_Systems_for_Management [Accessed 23 Jan. 2015]. • BUSINESSDICTIONARY.COM What is management accounting?

Companies in each country have to adapt and regulate their financial statements to certain requirements. They base and format their accounting standards on their national General Accepted Accounting Principles (GAAP) set by security regulators. However, in this modern globalized era, owing to too many financial differences between nations, it is increasingly difficult for entities to compare their financial records and identify trends in their financial position and performance with their competitors. As an answer to such financial chaos, harmonisation consists of formulating one universal GAAP; accountants worldwide would subsequently be able to use one single standardized practice, which would, according to Weber (1992), improve financial market information, government accountability, facilitate international transactions and minimise exchange costs. However, harmonising standards remains a disputable answer in accounting.

This can be one reason for creating a stable economic environment where small companies or individual businesses have confidence in the banking system. Bank Regulation Pre-1988 Bank regulation before 1988 focused on setting minimum levels for the ratio of capital to total assets. However because capital requirement levels and regulatory enforcement varied between countries, some countries had their own regulations, which were more diligently than other. The problem with regulation before 1988 was that they could not determine total risk in a bank, including all off-balance sheet items. The BIS Accord 1998 (Basel I) The 1988 BIS Accord was the first attempt to tackle these issues by setting international risk based standards for capital requirements.