商务管理留学本科课程作业

商务管理留学本科课程作业

来源:www.51fabiao.org作者:cinq发布时间:2014-01-12 09:38
从本质上说,会计是一个经济信息系统,这也是在国际会计界比较一致的看法。会计的主要特点是要弄清楚了各种会计信息资料的企业的经济活动。

论文题目:The differences between accrual accounting and cash-flow accounting

论文语言:英语论文 English
论文专业:business and economic
字数:1100
学校国家:荷兰
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论文用于:BA assignment 本科课程作业
 
权责发生制和现金流之间的会计差异
 
所有企业需要占他们的经济活动。该系统和普通会计实务和会计形成一个完整的体系。从本质上说,会计是一个经济信息系统,这也是在国际会计界比较一致的看法。
The differences between accrual accounting and cash-flow accounting
 
All the firms require accounting for their economic activities. The systematic and ordinary people keep accounting practice, and formed a complete system of accounting. In essence, accounting is an economic information system, this is also a more consistent view in the international accounting field. The main feature of accounting is to figure up the enterprise economic activity of all kinds of data of accounting information. The two most popular bases of accounting are cash and accrual. Each basis of accounting reports income and expenses at various times in the business operating cycle. Cash basis accounting enables to record transactions that involve cash, such as cash inflows and outflows. Cash inflows include payments from customers and interest income on savings accounts. Unlike cash accounting, accrual accounting conforms to financial reporting norms, such as GAAP and IFRS. So in this article, the following question will be answered: what are the advantages and drawbacks of switching to cash-flow accounting? A recent paper by Lundholm and O’Keefe 2001 has shown that accrual accounting residual income models and earnings capitalization models perform, over a range of conditions, better than cash flow or dividend discount models. Besides, an indication will be presented of the way in which follow-up research may contribute to the existing theory about accounting.
   Accounting is a set of systematic theory and method. The reason for companies keep accounts is to know where and how they earned their revenues and how they used it. Also the accountant must be clear for whom the information is being prepared and for what purpose the information will be used. Nevertheless, the information contained in accounting reports helps these users to make decisions relating to the business. For example, when managers faced with decisions in the business activities, they need accounting section provides accounting information to formulate various decisions. The execution and assessment also need accounting to do performance measurement. So accounting on the organization and management is very important, it is the language of business.
    When considering the cash-flow accounting, it is a method of bookkeeping that records financial events based on cash flow and cash position. Under the cash method, income is not counted until cash is actually received and expenses are not counted until actually paid. Accounting records prepared using the cash basic recognize income and expenses according to real-time cash flow. The advantage of cash-flow accounting is more easier to do than accrual method. Also, it is objective with few choices to make. 
   On the contrast, no attempt is made to match an expense with the revenues it generates. This means that the income statement and balance sheet may not be good pictures of recent activity and resent activity conditions. Cash-based accounting can distort the true operations of the activity and incorrectly reflect income. Also Dechow realized cash flow is not necessarily informative because it has timing and matching problems and will cause them to be noisy measure of firm performance ( Dechow, 1994, p 8-10). When firm is in a slump, some big changes of investment and financial activities will cause the cash flows to be more severe timing and matching problems. Therefore, cash flow's ability to show firm performance will reduce as the firms' investment and financing activities increase
   When considering the accrual accounting that recognizes revenues and expenses as they occur, even though the cash receipt from the revenue or the cash disbursement related to the expense may occur before or after the event that causes revenue or expense recognition. Accrual basis accounting measures current income more accurately than the cash method. This means that the balance sheet is a more accurate estimate of financial position. In addition, accurate, current information makes it easier to predict future income and financial position. It is also provide useful information about the real level of government’s liabilities and improve the management of government’s assets and liabilities. Since accrual basis accounting records revenues and expenses together in the same time period based on their causal relationships, it produces more accurate gauges of entities’ performance in any time period. ( Rayburn, 1986, p 1-5)
    On the contrary, the drawbacks of accrual accounting is difficult to understand. When the firms use accrual accounting, the accounting must be analyzed every month. Confusion exists because net income does not equal the period’s change in cash. The cash balance of a company with high income may even reduce during the year. According to Dechow, the use of accruals introduces a new set of problems. Management typically has some discretion over the recognition of accruals. This discretion can be used by management to signal their private information or to opportunistically manipulate earnings. Earnings will become a less reliable measure of firm performance and cash flow could become more preferable. ( Dechow, 1994, p 3-7)
   In conclusion, we can say that keeping accounting is very important for the  companies because it records the way a business has grown and after analyzing figures, the result will show the way it should go in the future. Future is gambled on the advice of accountants. It is a great step to improving one's capital base, both from the finance aspect to the resources an organization uses in carrying out its objectives understanding what an accounting information is and how important it is. A business company will require accounting information so as to enable its management and control its finances and resources. It also needs to be able to improve on its level of profit earning, to realize its declining in its profitability level. It also needs to know the differences between government’s marginal liability and its marginal assets.
   
Bibliography

   Stephen H. Penman ( 2001 ). On comparing cash flow and accrual accounting models for use in equity valuation: A response to Lundholm and O’Keefe. Contemporary Accounting Research, p. 8.
   Bowen, R.M., Burgstahler, D.& Daley, L.A.(1987). The Incremental Information Content of Accrual versus Cash Flows http://www.51fabiao.org/dxassignment . The Accounting Review, p. 723-747. ( The focus is especially on pp. 723-729. )
   Dechow, P.M.(1994). Accounting earnings and cash flows as measures of firm performance: The role of accounting accruals. Journal of Accounting and Economics, 18 (1), 3-42.