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Current Issues in Accounting - Report

   

Added on  2021-06-14

14 Pages3424 Words114 Views
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Running head: CURRENT ISSUES IN ACCOUNTING 1Current Issues in accountingStudent’s (Name)Institution
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CURRENT ISSUES IN ACCOUNTING 2
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CURRENT ISSUES IN ACCOUNTING 3Executive summaryThis report addresses the requirements of accounting policy choice and creativeaccounting (part A). This looks at factors influencing the choice between alternative accountingrecognition measurement and disclosure policies and accounting policy choice and opportunisticbehavior which looks at the factors affecting the decision of policy in maximizing profitsconcerning BHP company annual report of 2017.In the increase of standards and accounting methods there is a need for choosing the bestapproach following the company needs, AASB 108requires the choice of accounting policyshould produce financial statements that contain relevant and reliable information, and they arecomparable and understandable.The report considers the following areas in part (A), accounting policy choice, biasedestimates or predictions, disclosure for influencing interpretation and timing of transactions. Thisreport presents findings from various reliable and accurate sources such as the annual report forBHP Company 2017, Australian Accounting Standards and Henderson et al. book on accountingpolicy.Generally, this report identifies and explains examples of how accountants use creativityin presenting financial statement with reason explaining their choice and use of contractingprocess to reduce opportunistic behavior and it examples provided in the analysis of AASB 108and Harne's et al. 2014.Introduction
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CURRENT ISSUES IN ACCOUNTING 4There has been an increase in the number of accounting standards that have been backedby the legislature. Every organization is required to have an accounting method depending on itssize and its decision since some financial aspects are not addressed in some accountingstandards, some do not contain the retires for selecting the best among them, and the accountantsare required to make the best choice from the variety of estimates. This need for the option isoutlined in AASB 108. Accounting methods are the rules followed by an organization during thereporting of its revenues and expenses in its financial statements mostly on a balance sheet(Jones, 2011). There are two major types of methods are cash accounting basis and accrualaccounting basis, the choice of either of the methods depends on the accounting standards forrevenue earned by a business and the selection of the company itself. Mostly small businesses gofor cash accounting which does addition of cash, checks and fair market value of property ofservices during the year and expenses are considered in the year in which they paid, on thecontrary, the accrual method is based on a matching principle where the emphasis is on thetiming of revenue and expenses recognition and expenses are deducted in the balance sheet inthe tear according to contract even when the money will be paid later. Once accompany hasselected an accounting method they cannot quickly change until they receive consent from IRSbody and changes in accounting method will result to improve overall accounting in anorganization. This paper will address the requirement for accounting policy choice and creativeaccounting and accounting policy choice and opportunistic behavior in the case study of BHP.BHP was formerly known as BHP Billiton in Australia. It is a mining and metal company thatprovides products such as petroleum iron ore, copper natural gas, nickel, and uranium in theevaluation of their annual report 2017.Accounting Policy Choice and Creative Accounting
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