Uni update

[out_there]

Just quickly updating from the uni computer labs. My train doesn't go for another half hour, so I've got time for a quick course recap.

And, just realised that most of you probably won't be interested in this, so I'll cut-tag it. I came ten minutes late to class because I forgot the room number (had to log in to the computer lab to find it), but apart from that, it was good.

Had my first class for Accounting Theories. It looks like it's actually going to be interesting. Apparently, in past years it focused on the acounting standards and how things were treated, but now it's focusing on the reasoning and biases behind the different theories.

Tracking down the biases in an argument? I can do that. Memorising standard after standard? Not so much.

So, we have now had the difference between normative and positive theories drummed into our heads (normative = what should happen; positive = explains what is happening).

We've had discussions of the internal logic of theories, which is why the phrase "post hoc, ergo propter hoc" appears in my notes (although, I misspelt it as prompter, I just realised). *g*

Also, found out that the australian accounting standards don't allow LIFO (Last In First Out) inventory system, but the American ones do. That made me think:
a) the American tax department isn't quite as anal as ours, and
b) celli probably knows that.

I can't believe I'm actually kinda excited about this course. Mind you, expect that to wear off the second I sit down to actually do the readings.

Bad side to the uni computer labs. No access to hotmail. Well, on the good side, it means I won't be hanging around uni until the wee hours of the night. *g*

Comments

[celli]

I'm kinda surprised that we allow LIFO, since everyone else is all, "Bad! Bad inventory system! Must be shot and put out of its misery!"

Did you know my stupid International Accounting class isn't teaching us Australian *or* Canadian accounting? They seem to think UK is enough. *haughty sniff* Jerks.

I want to hear all about your theories. We haven't done anything along those lines yet, although that may be next year.

[out-there.livejournal.com]

Did you know my stupid International Accounting class isn't teaching us Australian *or* Canadian accounting? They seem to think UK is enough. *haughty sniff* Jerks.

Heh. *Dodgy*. Well, apparently our assignment for this course (marked on the exam, and a 3000 word assignment) is on the international accounting standards and how they're affecting australian accounting methods (or something like that).

*shrugs* No, I haven't looked at the course guide yet. I made it to the course, so I'm considering that a personal victory.

I want to hear all about your theories.

Heh. Well, at the moment, it's just being drilled into our heads that the main two divisions are Normative Theories and Positive Theories.

Positive Theories are based on observation of past performances and accounting methods. It's an attempt to theorise why certain accounting methods are used by the majority of accountants. It's considered "proved" when the predicted results accurately reflect the actual results. The criticisms of it are that it assumes that the method the majority of accountants use must be the most correct method, and that it doesn't prescribe any new methods to accountants.

Positive Theories came about in America in the early 1960's, in your Accounting Standards. (I'm writing this from memory, so I can't remember your acronyms. *g*) It was basically a move to standardise accounting standards by defining the current practices of accountants.

Normative Theories describe what accounting methods *should* be used by accountants. They don't rely on past observations, they don't rely on real-life observations at all. They rely on what the researcher considers a more accurate reflection of the financial position. The criticisms of normative theories include the fact that it's not based upon "real world" observations and that it depends upon the researcher's biases (and what they consider most important).

Normative theories came about in the late 1960s/70s, when inflation started rising at high level, and they found that the historical cost method of valuation wasn't accurately reflecting the asset's value. Hence, normative theories of current costing started being suggested.

The historical cost issue was discussed a couple times, which I appreciated. I like a concrete example of a theory. So, the traditional historical cost theory is a positive theory. It's the way that most accountants use because it's very easy to verify, it leaves a clear audit trail, and it gives a basis for comparison of companies (which current costing methods don't, because even int he same industry, companies using different costing methods will have different values of the same assets). On the other hand, current costing methods are normative theories. It's researchers looking at assets, and saying the more accurate way of valuing them would be at market cost today, not at whatever you paid 20 years ago for it. Theoretically, it keeps a company up to date with inflation and gives a more accurate value (*but* the number of different and equally valid current costing methods makes it difficult to implement across the accounting profession).

Interestingly enough, the normative theories have *never* overthrown the current positive theories. Part of this is that "normal" accountants (as opposed to the academic accountants that research these theories), prefer the old "tried and true" methods. Another part is that normative researchers can't decide between themselves which one should be used, hence it's very hard to introduce one new way of doing it.

Heh. Talk about recapping what you've learnt! *g* I'm surprised that much sunk in. (I can't believe it was so much it needed two posts. *g*)

[out-there.livejournal.com]

I'm kinda surprised that we allow LIFO, since everyone else is all, "Bad! Bad inventory system! Must be shot and put out of its misery!"

Hee! Well, yeah, it's kinda... dodgy. I mean, easy way of reducing your profit and thereby reduce your tax liability. (Although, as it was argued, it may be a more "accurate" way of measuring the cost, as in the cost of sales tends to be closer to the LIFO calculations than the FIFO system.) Still, it was a moment of "Oooh, Celli would know that."

Mind you, I'm having another Celli moment, because there's nothing on TV, so I've got Alias on. If you were on AIM I'd be bugging you to find out who everyone is... (Apparently, the Luke Perry-alike is Vaughn... *shrugs* I wanna know who the snarky guy in the suit is. Anyone who bitches about dieting automatically gains some brownie points.)

...

And, the snarky guy? I still like him. But I think Spooks rocks far more, in terms of spy shows. Then again, watching an emotional ep where Sydney's all "I've been asleep for 2 years and everyone's gone and Vaughn's married!" isn't exactly... easy for the uninitated.