词条 | Constraints accounting |
释义 |
Constraints accounting (CA) allow some variations generally accepted accounting principles(GAAP) when reporting financial statements of company and these variations do not violate the GAAP in light of recognised CA.[1] CA contains explicit consideration of the role of constraints in accounting and constraints relate to limitations when providing financial information.[2] The definition of a constraint is a regulation which belongs to prescribed bounds [3] and there are four main types of constraints which are the cost-benefit relationship, materiality, industry practices, and conservatism,[4] and these constraints are also accounting guidelines which border the hierarchy of qualitative information. Types of ConstraintsCost-benefit RelationshipThe cost-benefit relationship constraint is also called cost effectiveness constraints and is pervasive throughout the framework.[5] The companies need to spend money and time in the process of providing financial statements.[6] To be more specific, Costs can constraint the range of information when providing financial reporting[7] on the grounds that the companies must "collect, process, analyze and disseminate relevant information"[4] which need time and money. For investors, they want to know all financial information if possible in ideal condition, which may cause tremendous financial burden in the corporations.[8] Moreover, some financial information may not valuable for external users to acquire a huge benefit, for example, how much money do a company spend for its greening of headquarters. Therefore, when deciding the components of financial reporting, companies need to measure the sense of particular financial information and the expenditure of providing particular information and the benefits they can acquire from this particular information.[10] Properly speaking, If the costs in particular information exceed the benefit they can acquire, companies may choose to not disclose this particular information.[9] For example, If there is $0.1 difference between checkbook register and bank statement, accountant should ignore the $0.1 rather than waste time and money to find the $0.1.[3] MaterialityCompanies need to consider materiality when providing financial information.[10] Particularly, companies must disclose the material information which can influence the financial performance and some immaterial information can be excluded.[11] For example, a company owns $10 million net assets and therefore a default of customer with $1000 is immateriality and in contrast if the amount of default is $2 million, which can influence the financial decisions and thus means material. However, there are also some small items which can transfer net profit to net loss and these item can be considered as material items.[12] In order to judge whether the information is material or not, companies can based on the following materiality process:[13] Define purpose and scopeExpected:[13]
Advanced:
Identify Potential TopicsExpected:[13]
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CategoriseExpected:[13]
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Gather information about the impact and importance of topicsExcepted:[13]
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PrioritiseExpected:[13]
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Engage managementExpected:[13]
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Seek stakeholder feedbackExpected:[13]
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Industry PracticesIndustry Practices is a less dominated constraint compared with cost and relationships and materiality in financial reporting.[4] This constraints means in some industries, it is hard and costly to calculate the production costs and therefore companies in these particular industries choose to only report the current market prices instead of production costs.[14] For example, in agriculture industry, calculating cost per crop is difficult and expensive and hence they choose to report the price in the current market which is easier for farmers.[15] ConservatismAccountants estimate the transactions and then choose to whether record the transactions or not based on their own judgement. In terms of that, conservatism is helpful for accountants to make a choice between two similarly alternatives and it makes accountants choose to record the less optimistic choice.[28] For example, If there is possible that customers will sue the company and they may also not to sue the company. In this case, accountants need to disclose this situation to investors.[3] Moreover, the Conservatism is also a less dominated constraint, which means firms also need to consider more about bad news than good news when reporting financial statements.[16] In particular, firms need to choose the method that " least likely overstates assets and income or understates liabilities and losses"[4] when encountering accounting issues. For example, if the staff believe there will be 2% bad debt in terms of receivables based on historical information and another staff believe there will be 5% because of sudden drop, the company need to use the 5% figure when providing financial statements.[17] References1. ^{{Cite book|title = Management Dynamics: Merging Constraints Accounting to Drive Improvement|last = Caspari, J A.|first = Caspari, P.|publisher = John Wiley&Sons,Inc.|year = 2004|isbn = 0-47167231-9|location = |pages = }} 2. ^{{Cite book|title = Accounting information and managerial work|last = Hall, M.|publisher = |year = 2010|isbn = |location = |pages = }} 3. ^1 2 {{Cite web |url =http://wsfcs.k12.nc.us/cms/lib/NC01001395/Centricity/Domain/593/1.01%20GAAP%20PowerPoint%203.pptx&usg=AFQjCNEdtJY9MJcxRVzltPBjfEc5chbx-g|title = Generally Accepted Accounting Principles – Accounting Constraints, Concepts, Assumptions, and Principles|date = |accessdate = November 1, 2015|website = |publisher = }} 4. ^1 2 3 {{Cite web |url =http://info_12066263_constraints-accounting.html|title = What are the Constraints of Accounting?|date = |accessdate = Oct 18, 2015|website = |publisher = |last = Way, Jay}} 5. ^{{Cite book|title = Intermediate Accounting|author1=Kieso, D E. |author2=Weygantdt, J J. |author3=Warfield, T D. |publisher = WILEY|year = 2013|isbn = |location = |pages = }} 6. ^{{Cite book|title = Introduction to Financial Accounting|author1=Dauberies, H. |author2=Annand, D |publisher = |year = 2014|isbn = 978-0-9936701-2-1|location = |pages = }} 7. ^{{Cite web|url =http://www.fasb.org/jsp/FASB/Page/SectionPage&cid=1351027336339|title = Cost - Benefit Analysis|date = |accessdate = Oct 18, 2015|website = |publisher = |last = FASB}} 8. ^{{Cite web|url =http://www.myaccountingcourse.com/accounting-principles/cost-benefit-principle|title = Cost and Benefit Principles|date = |accessdate = Oct 20, 2015|website = |publisher = }} 9. ^{{Cite book|title = Accounting Principles: A Business Perspective, Financial Accounting|last = Hermanson, Edwards, and Maher|publisher = |year = 2011|isbn = |location = |pages = }} 10. ^1 {{Cite book|title = Principles of Accounting|last = Leiwy, D.|publisher = |year = 2015|isbn = |location = |pages = }} 11. ^{{Cite book|title = Application of Principles Accounting and Financial Reporting To Public Telecommunications Entities|last = Corporation for Public Broadcasting|publisher = |year = 2005|isbn = |location = |pages = }} 12. ^{{Cite web|url =http://www.accountingtools.com/materiality-principle|title = The Materiality Principle|date = |accessdate = Oct 20, 2015|website = |publisher = }} 13. ^1 2 3 4 5 6 7 8 {{Cite book|title = The Essentials of Materiality Assessment|last = KPMG|publisher = |year = 2013|isbn = |location = |pages = }} 14. ^{{Cite web|url =http://www.myaccountingcourse.com/accounting-principles/industry-practices-constraint|title = Industry Practices Constraint|date = |accessdate = Oct 18, 2015|website = |publisher = }} 15. ^{{Cite web|url =http://www.myaccountingcourse.com/accounting-principles/industry-practices-constraint|title = Industry Practice Constraints|date = |accessdate = Oct 19, 2015|website = |publisher = |last = My Accounting Course}} 16. ^1 {{Cite journal|url =|title = JOURNAL OF Accounting & Economics|last = Basu,S.|date = 1997|journal = The conservatism principle and the asymmetric timeliness of earnings|doi = |pmid = |access-date = }} 17. ^{{Cite web|url =http://www.accountingtools.com/conservatism-principle|title = The Conservatism Principle|date = |accessdate = Oct 20, 2015|website = |publisher = }} 1 : Management accounting |
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