Accounting Theories and miscellanea...
Mar. 17th, 2004 10:07 am![[personal profile]](https://www.dreamwidth.org/img/silk/identity/user.png){kind=small}
out_thereI shouldn't snigger at guys on the tram.
I didn't mean to. I just couldn't help it. He was such a Xander-alike. He had the eyes, the brows, the mouth, the shot, scruffy, dark brown hair. I just kept watching him, and grinning to myself.
When he asked me, rather politely what I was laughing at, I just had to shake my head and say, "Don't worry." I mean, it's not like I could have turned around and said, "Has anyone ever told you that you have a striking resemblance to NB?" or, "You look like one of my back-up tv-boyfriends. Do you wanna make out?"
Meanwhile, what was really amusing me? There's a Xander-alike travelling on the tram and![[livejournal.com profile]](https://www.dreamwidth.org/img/external/lj-userinfo.gif)
deadspiders spotted a Spike-alike on the train a couple weeks ago. There's a psuedo Xander and Spike travelling on Melbourne's public transport system... *sniggers*
***
Does anyone have any tips of gettng foundation out of clothes? I wear a Revlon foundation, and it's pretty light on my skin, but if I spill a drop on my top, it stains. I've already lost one top to this madness, and I managed to splatter a couple of drops on this morning's top as well.
Any ideas?
***
And, while I'm asking for advice, Mum's asked a couple of times about how I'm meeting people online. I tend to waffle about fandom (and, no, I'm not gong to admit that I'm writing gay porn and posting it to the world wide web, because that will freak her out on a couple of levels).
Anyway, I think she's hinting because she'd like to get more involved in the internet, but I spend almost all my online time doing something slash related. Any ideas on interesting sites I could suggest/recommend to her?
I honestly have no idea. I'd suggest LJ, but if you don't have the fandom influence, I'm not sure how interesting it would be. On the other hand, she's against the idea of writing a journal, or sharing too much, so I doubt she'd be interested in the activity that absorbs 70% of my online time.
***
Class was fine. Got out half an hour early, so yay! Spent the tute working in groups on the questions. Theories all about Accounting Regulations, or more correctly, why we have regulations at all. The main three theories are:
- Public Interest theory: Regulations protect the public, and make sure that financially powerful groups can't edit/control the level of information they provide. It tries to give everyone an even playing feild, so the rich don't have an advantage.
- Capture theory: Regulations are originally introduced to protect the public, but get influenced by the regulators ("captured" by them). Hence, although they start off by trying to be objective and fair, the accounting profession ends up altering them to suit the profession, or to suit their clients (not the public at large).
- Efficient Market theory: Based on the economic rationalisation of an efficient market, assumes that everyone is motivated by self-interest. Hence, the regulations are motivated by the accounting profession's self interest and are used as a way to maintain status, salaries and level of importance amongst the business community.
Then, we had the lecture, which was all about the Normative (prescriptive) theories of asset valuation, and how they affect profit.
The main positive theory, that has been used for centuries and is still used by the majority, is Historical Cost Accounting. This means that the asset is valued at the price that it was bought for (that appears on the invoice), and is devalued over time through depreciation (to represent the "value" that has been used by the company).
The drawback to this system is that it assumes the constant value of money, that a dollar in 1985 is still a dollar in 2005. Due to inflation, changing exchange rates and (? There's a third factor, but I can't remember), the purchasing power of money, the amount of things you can actually buy for it, doesn't remain the same. Hence, the value of money changes, but the historical cost system ignores that.
During times of high inflation (1960s, 70s, 80s), this became a strong criticism of the Historical Cost system, and alternative systems were suggested. (These theories are normative, because they say how accounting *should* be done, instead of reporting on how it *is* done.)
The three normative theories are:
- CPP: Current Purchasing Power (or General Purchasing Power)
This uses the CPI (general price index showing the amount of inflation) to increase the historical costs to reflect the impact of inflation. Revaluations are seen as reflecting current values, and are not considered profit or loss. The advantage is that it's an easy system and you only need the historical figures and the CPI to complete it. The disadvantage is that the CPI is a *general* index, and isn't an accurate reflection of the increase or decrease in a particular asset. Also, it may not be suitable for all industries or businesses, and makes comparison between companies difficult.
- CCA: Current Cost Accounting
This method uses the current replacement value of assets. The change in asset value is considered an unrealised gain/loss (but is compared to historical cost figures). The Profit & Loss report shows the "operating Profit" which excludes this unrealised gains/losses, and the "business profit" which includes the unrealised gain/loss. This allows for greater comaparability, as users can see the operating expenses and income seperately. It's also more accurate, as the assets reflect market costs.
Drawbacks are that it's time consuming to research the replacement costs (which are highly subjective depending on who's doing the research) and that it doesn't acknowledge that some assets may become obsolete (and would be replaced with more modern technology).
(It was also accused of being highly time consuming and ultimately misleading by Professor ...???... who developed the CoCoA system.)
- CoCoA: Continual Contemporary Accounting
This system values assets on their *sale* value. Basically, it takes the position that if the company was liquidized tomorrow, this is the value that it would receive. It's considered a radical normative approach because it redefines the purpose of accounting, "to allow users to adapt to future conditions" and disregards the "going concern" notion (which states that a company is assumed to live and exist forever). It also suggests that revenue should be recognised at time of purchase, not sale. (No, Celli, I don't see the logic of this either. *shrugs* It's counting your chickens before they've hatched, it you ask me.)
Unlike CPP and CCA, it is not based on historical cost figures and does not rely on merely "updating" them to show current values. Using the sale value of assets, it does recognise the changes in value as a gain/loss, but removes the need for depreciation. It ignores intangible assets (ie. does not recognise goodwil), infrastructure assets that cannot be divided and sold seperately (ie a network of roads, etc), and can have trouble judging unique assets (like artworks, etc).
Criticisms of this theory include the fact that it would require a large paradigm shift for the entire profession, and a readjustment of how the financial world sees the purpose of accounting. The sale value can be subjective and difficult to ascertain. The system doesn't recognise the fact that some assets are purchased to be used for income production and have no intention of being resold (like the infrastructure assets mentioned above, or the production assets used to make stuff).
If you ask me, CoCoA sounds kinda ridiculous. It's so different from current accounting practices that I just can't see how it could be practically implemented in the profession. Mind you, I haven't done the readings for this week, so there may be more positive points to it.
I didn't mean to. I just couldn't help it. He was such a Xander-alike. He had the eyes, the brows, the mouth, the shot, scruffy, dark brown hair. I just kept watching him, and grinning to myself.
When he asked me, rather politely what I was laughing at, I just had to shake my head and say, "Don't worry." I mean, it's not like I could have turned around and said, "Has anyone ever told you that you have a striking resemblance to NB?" or, "You look like one of my back-up tv-boyfriends. Do you wanna make out?"
Meanwhile, what was really amusing me? There's a Xander-alike travelling on the tram and
deadspiders spotted a Spike-alike on the train a couple weeks ago. There's a psuedo Xander and Spike travelling on Melbourne's public transport system... *sniggers* ***
Does anyone have any tips of gettng foundation out of clothes? I wear a Revlon foundation, and it's pretty light on my skin, but if I spill a drop on my top, it stains. I've already lost one top to this madness, and I managed to splatter a couple of drops on this morning's top as well.
Any ideas?
***
And, while I'm asking for advice, Mum's asked a couple of times about how I'm meeting people online. I tend to waffle about fandom (and, no, I'm not gong to admit that I'm writing gay porn and posting it to the world wide web, because that will freak her out on a couple of levels).
Anyway, I think she's hinting because she'd like to get more involved in the internet, but I spend almost all my online time doing something slash related. Any ideas on interesting sites I could suggest/recommend to her?
I honestly have no idea. I'd suggest LJ, but if you don't have the fandom influence, I'm not sure how interesting it would be. On the other hand, she's against the idea of writing a journal, or sharing too much, so I doubt she'd be interested in the activity that absorbs 70% of my online time.
***
Class was fine. Got out half an hour early, so yay! Spent the tute working in groups on the questions. Theories all about Accounting Regulations, or more correctly, why we have regulations at all. The main three theories are:
- Public Interest theory: Regulations protect the public, and make sure that financially powerful groups can't edit/control the level of information they provide. It tries to give everyone an even playing feild, so the rich don't have an advantage.
- Capture theory: Regulations are originally introduced to protect the public, but get influenced by the regulators ("captured" by them). Hence, although they start off by trying to be objective and fair, the accounting profession ends up altering them to suit the profession, or to suit their clients (not the public at large).
- Efficient Market theory: Based on the economic rationalisation of an efficient market, assumes that everyone is motivated by self-interest. Hence, the regulations are motivated by the accounting profession's self interest and are used as a way to maintain status, salaries and level of importance amongst the business community.
Then, we had the lecture, which was all about the Normative (prescriptive) theories of asset valuation, and how they affect profit.
The main positive theory, that has been used for centuries and is still used by the majority, is Historical Cost Accounting. This means that the asset is valued at the price that it was bought for (that appears on the invoice), and is devalued over time through depreciation (to represent the "value" that has been used by the company).
The drawback to this system is that it assumes the constant value of money, that a dollar in 1985 is still a dollar in 2005. Due to inflation, changing exchange rates and (? There's a third factor, but I can't remember), the purchasing power of money, the amount of things you can actually buy for it, doesn't remain the same. Hence, the value of money changes, but the historical cost system ignores that.
During times of high inflation (1960s, 70s, 80s), this became a strong criticism of the Historical Cost system, and alternative systems were suggested. (These theories are normative, because they say how accounting *should* be done, instead of reporting on how it *is* done.)
The three normative theories are:
- CPP: Current Purchasing Power (or General Purchasing Power)
This uses the CPI (general price index showing the amount of inflation) to increase the historical costs to reflect the impact of inflation. Revaluations are seen as reflecting current values, and are not considered profit or loss. The advantage is that it's an easy system and you only need the historical figures and the CPI to complete it. The disadvantage is that the CPI is a *general* index, and isn't an accurate reflection of the increase or decrease in a particular asset. Also, it may not be suitable for all industries or businesses, and makes comparison between companies difficult.
- CCA: Current Cost Accounting
This method uses the current replacement value of assets. The change in asset value is considered an unrealised gain/loss (but is compared to historical cost figures). The Profit & Loss report shows the "operating Profit" which excludes this unrealised gains/losses, and the "business profit" which includes the unrealised gain/loss. This allows for greater comaparability, as users can see the operating expenses and income seperately. It's also more accurate, as the assets reflect market costs.
Drawbacks are that it's time consuming to research the replacement costs (which are highly subjective depending on who's doing the research) and that it doesn't acknowledge that some assets may become obsolete (and would be replaced with more modern technology).
(It was also accused of being highly time consuming and ultimately misleading by Professor ...???... who developed the CoCoA system.)
- CoCoA: Continual Contemporary Accounting
This system values assets on their *sale* value. Basically, it takes the position that if the company was liquidized tomorrow, this is the value that it would receive. It's considered a radical normative approach because it redefines the purpose of accounting, "to allow users to adapt to future conditions" and disregards the "going concern" notion (which states that a company is assumed to live and exist forever). It also suggests that revenue should be recognised at time of purchase, not sale. (No, Celli, I don't see the logic of this either. *shrugs* It's counting your chickens before they've hatched, it you ask me.)
Unlike CPP and CCA, it is not based on historical cost figures and does not rely on merely "updating" them to show current values. Using the sale value of assets, it does recognise the changes in value as a gain/loss, but removes the need for depreciation. It ignores intangible assets (ie. does not recognise goodwil), infrastructure assets that cannot be divided and sold seperately (ie a network of roads, etc), and can have trouble judging unique assets (like artworks, etc).
Criticisms of this theory include the fact that it would require a large paradigm shift for the entire profession, and a readjustment of how the financial world sees the purpose of accounting. The sale value can be subjective and difficult to ascertain. The system doesn't recognise the fact that some assets are purchased to be used for income production and have no intention of being resold (like the infrastructure assets mentioned above, or the production assets used to make stuff).
If you ask me, CoCoA sounds kinda ridiculous. It's so different from current accounting practices that I just can't see how it could be practically implemented in the profession. Mind you, I haven't done the readings for this week, so there may be more positive points to it.
![[identity profile]](https://www.dreamwidth.org/img/silk/identity/openid.png){kind=small}
no subject
Date: 2004-03-16 04:25 pm (UTC)no subject
Date: 2004-03-16 05:14 pm (UTC)Do you know of any good boards? Ideally ones that don't use too much internet slang. Mum's not as anal as me about using capitals and paragraph breaks (she is in everyday life, but not in emails, etc), so that's not such a concern.
no subject
Date: 2004-03-21 10:20 pm (UTC)no subject
Date: 2004-03-16 06:53 pm (UTC)...
weird.
no subject
Date: 2004-03-16 09:29 pm (UTC)I was almost following the logic of that accounting system, right up until he said that. How could you buy stock for resale and account for as revenue? (Well, yes, I get that you value all non-monetary assets at sale value, so as soon as you buy stock, you automatically value it at the sale price, but... Yeah, weird. Very weird. It just totally ignores/makes irrelevant the whole matching period expenses to income.)
no subject
Date: 2004-03-18 03:47 am (UTC)no subject
Date: 2004-03-18 12:02 pm (UTC)Do you know of any sites that give an easy explanation of how to use it?