Financial Accounting chapter 04

CHAPTER Accounting Defined (ASC) Accounting Standards Council Accounting is a service activity. Its function is to provide quantitative information, primarily financial in nature, about economic entities, that is intended to be useful in making economic decisions. (AICPA) American Institute of Certified Public Accountants Accounting is the art of recording, classifying, and summarizing in a significant manner and in terms of money, transactions and events which are in part at least of a financial character and interpreting the results thereof. (AAA) American Accounting Association Accounting is the process of identifying, measuring, and communicating economic information to permit informed judgment by users of the information.

Accounting: "the fairest invention of the human mind." (Goethe) 2.1 Introduction As intimated by its title, this thesis proposes the inclusion of information on flexibility as a means of enhancing the accounting information systems of business organisations. However, the inclusion of such information would be incomplete without a prior discussion of the purpose of Accounting and its product, accounting information. In this chapter the nature and role of Accounting is considered and the classification of information as management accounting information and financial accounting information is discussed. The purpose of providing accounting information, as well as the qualitative characteristics of decision-useful information, is addressed. In the conclusion the users of accounting information are identified and their needs summarised. 2.2 The nature of Accounting Before the nature of Accounting can be addressed, the field of study must first be delineated. This entails an identification of the area of interest and of the borders of the discipline in relation to neighbouring disciplines. Thus a successful definition of Accounting should clearly delineate the boundaries of the discipline at a point in time, give a precise statement of its essential nature, and be flexible so that innovation and growth in the discipline can be accommodated. A number of definitions of Accounting have appeared in the literature, each attempting to demarcate its field of study. Developing a single definition of Accounting is however beset with difficulties. The first difficulty stems from the dynamic nature of Accounting. Glautier and Underdown (1986, p.3) point out that the University of Pretoria.etd

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1997

Nandkumar Nayar, Zben Zhu, and especially G. Lee Willinger (Chairman) for advise and encouragement throughout the project. I could not have asked for a more supportive committee. Each is likely to dismiss their respective inputs. However, I neither take their efforts for granted, nor believe this project could have been completed without their assistance. My Chairman, G. Lee \^linger, is owed special praise. He freely gave his time throughout my studies and this project-offering guidance, instruction, and friendship without reservation. I also want to single out the efforts of Frances Ayres over my doctoral studies and this project. She continually opened my eyes to solutions where I thought none existed. My wish (and challenge) is that the investments of Professors Willinger, Ayres, Chandra, Nayar, and Zhu are put to good use. Yet, my deepest thanks and debt of gratitude goes to my best friend and soul-raate, Lori Whisenant One could not find a more caring and supportive person. Without question, this project could not have completed without her by my side, nor would it have been begun. She endured my highs and lows throughout the five years leading up to completion o f this project with a constant smile and loving embrace. To no other individual do I owe so much for the completion of both my doctoral studies and this project.

The examination consisted five compulsory questions (Question 1 for 30 marks. Question 2 for 10 marks and three further questions of 20 marks each). 15 minutes reading time was provided at the commencement of the examination. The vast majority of candidates attempted all five questions. Many candidates presented their answer to question 1 first, indicating appropriate use of reading time to prepare for the main scenario. Candidates who attempted questions in a random order, and question 1 last, normally struggled to obtain a pass standard. Many candidates presented a high standard of answer for all five questions,. However, there was again evidence of different standards indicating where additional work and study time and/or assistance is required. The inadequate performance of many candidates was once again exacerbated by a clear failure to carefully read the content and requirements of questions. This contributed to the continuing inadequate performance on narrative questions. Workings were generally shown but were at times difficult to follow. Too many candidates continue to display their answers poorly, with a lack of clear labelling to indicate which questions are being attempted. Each question should be started on a new page and candidates must give more thought to the layout and organisation of their answers. Valuable time can be easily wasted, for example by not tabulating the answer to Question 3(b).

Journal of Instructional Techniques in Finance