ADVANCED FINANCIAL ACCOUNTING.

ADVANCED FINANCIAL ACCOUNTING

Table of contents
Introduction......................................................................................................................................3
Youtus Enterprise operation............................................................................................................3
Conclusion.......................................................................................................................................6
References........................................................................................................................................7
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Introduction
Positive accounting theory propagates the contractual view of the firm and the services of
contract which firms enter in order to obligate its accounting activities. Accounting policies used
by the firm must fulfill the contractual obligations stated by the stakeholder’s contract. This
means company like Youtus enterprise while transforming into public company has to and must
adapt to newer policies to match the contractual obligations of investors and stakeholders
associated with the firm (Schaltegger & Burritt, 2017).
Youtus Enterprise operation
The accounting information system of the company should be developed because after entering
the public sector operations the company has to create financial statement in a more evident form
to show the financial position of the firm. Investor based on financial position make decision on
further investment hence proper financial statement are to be prepared which will need more
detailed information from the accounting information system.
Corporate governance structure of the company has to change as the company is now publicly
owned and their shareholders are also owners of their share within the firm. Hence more
competent corporate governance is required which has a broader view on the stakeholder interest
(Francis, Hasan, Park & Wu, 2015).
The company’s status will change and the organizational structure of the company will change
which will lead to change in business status of the form of the company. They will now have to
divide profit with its stakeholder. Therefore, it is important to change the business status for
Equity Financing.
It is very uncertain to decide that cost of funding for debt is higher than cost of equity financing.
Although in cases of loss the cost of debt financing is higher than the cost of equity funds. This is
because irrespective of the company's operating profit or loss, the company is liable to pay
interest on the debt taken. This increases the financial burden on the company. Hence, it can be
said that the cost of having funds from debt financing is more of physical and behavioural nature.
This is because it puts the company under a certain liability which the company has to perform
where as equity capital is a capital which cannot be met by a company its fails to incur profit
(Libby, 2017). This has a huge liability over the firm which exist until and unless the debt is
paid off by the firm after a certain period of time. Hence it can be said that financial pressure of
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