Research on Accounting Practices

Added on - Jun 2020

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Research on accountingpractices
Table of ContentsINTRODUCTION...........................................................................................................................1QUESTION 1...................................................................................................................................1a)............................................................................................................................................1b)............................................................................................................................................1c)............................................................................................................................................2QUESTION 2...................................................................................................................................2a.............................................................................................................................................2b.............................................................................................................................................3c..............................................................................................................................................3d..............................................................................................................................................3e..............................................................................................................................................3f...............................................................................................................................................4g.............................................................................................................................................4QUESTION 3...................................................................................................................................5a..............................................................................................................................................5b).............................................................................................................................................7CONCLUSION................................................................................................................................8REFERENCES................................................................................................................................9
INTRODUCTIONAccounting is techniques of recording comprehensive record of financial transactionsthose are pertaining to a businesses concern (Ge, Matsumoto and Zhang, 2011, pp.1141-1179). Itis that process which is used by the accountants to summarise, analyse and prepare report forthose transactions that are perform by an organisation during the year. The project report consistsof information regarding internal financial reporting. There are various cases with the advantagesand disadvantages which is explaining different approaches under this report. Certain theoryrelated with the agency and compensation are discussed under this report. Further, this reportconsists of a project research on auditing so that proper evaluation can be done in relation toauditing practises.QUESTION 1a)In any country there are various tests which are conducted so that users can be providedwith relevant information that is used by them for the purpose of decision making. In given casedata regarding various industries is provided and by that it is all the sectors in which dealing aremade by organisations is identified. Also the products which are offered in number andpercentage both are available. Also the performance of all the sectors is determined by the use ofprovided data and that helps the uses to know the sectors which is operating in best manner. Thiswill help them in taking such decisions which will be in overall benefit of all.b)The two approaches which are used in the given case are sampling and use of totalpopulation and there are various merits and demerits which are there in respect of them whichare as follows:Benefits of sampling:The main merit of it is that time will be saved as the whole population is not required tobe evaluated now and also cost will be reduced with the help of this.Demerits of sampling:The main shortcoming of this process is that as only a group will be examined so thereare chances that the outcome that is determined is not correct. This is because it is not alwaysnecessary that group will be representing all in proper manner and there may be differences.1
Advantages of Using entire population:As all the people will be involved in this process so the accuracy is improved and the datathat is obtained by it represents the actual results (Kothari, Ramanna and Skinner, 2010, pp.246-286). There will be no aspect which is left so the risk involved in business is reduced with theuse of this.Disadvantage of using whole population:By this work load will be increased and this increases the burden on employees. Also thecost and time that is required to carry out the whole process is enhanced and this reduces theoverall profitability of company.c)From the study which has been carried out it can be said that using the total populationapproach is more suitable in the given context. This is because by this it will be possible to knowthe manner in which reporting is carried out by all the organisations. The data which is obtainedby this is accurate and there will no chances that any risk will be involved in it. As the test iscarried out at national level so it is necessary that accuracy shall be ensured as data is to be madeavailable to all and on that basis only they are going to take decisions.QUESTION 2a.Agency theory is developed for the purpose of analysing conflict interests between keystakeholders, in addition to the development of the mechanisms for the purpose of resolvingconflicts. Agency theory may be applied in every situation where one party delegates work toanother[agent], who performs that work. Agency theory includes to describe the relationship interms of behavioural features and help in evaluating the situations between the parties who lackof trust. This theory assumes that the principles wealth would not increase because agent andprinciple:1.have different goals2.have different access to information3.different propensity towards risk2
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