Financial Accounting for Education and Research- myassignmenthelp

Question: Discuss about theFinancial Accounting for Education and Research. Answer: Positive Accounting Theory is considered to be a common term for any concept that basically offers descriptive data in regards to the conduct of accountants. This theory is also a branch of hypothetical study in accounting that tries to make good predictions of the actual world activities and then interpret them to accounting relations (Frias, Rodriguez, Garcia, 2013). Positive Accounting Theorys basic purpose is to understand and forecast the selection of accounting procedures across different organizations. The difference that exists between normative accounting theory and positive accounting theory is that positive accounting theory is based objectivity and facts. This theory emphasizes on exploring the economic data and statistics at hand and delivering decisions based on the figures. Positive Accounting Theory also describes, predicts or explains what is happening in the world (Radebaugh, 2014). Consequently, the normative theory is basically subjective and intends to elucidate what the financial future must be for an investor or a business. As a result, normative accounting theory practices is a method of value decision that can present subjective ethics into accounting. Normative accounting theories also do not forecast the practices that are acceptable. The difference between agency theory and contracting theory is that agency theory enlightens the relationship that exists between agents and principles in a firm. This theory is apprehensive with resolving diverse issues that can occur in agency interactions due to unaligned goals or diverse aversion levels to risks (Bonin, 2013). On the other hand, contracting theory is considered to be a theory that researches how economic performers can build contractual measures basically in the presence of unequal data. A standard activity in the contract theory is to embody the decision maker conduct under definite numerical arrangements and then utilize an optimization process in order to ascertain ideal decisions. Agency costs are basically categorized into; Monitoring costs that are sustained when the principles try to restrict or monitor the agents actions (Tai, Chuang, 2014). Residual loss is considered to be cost sustained from divergent agents and principal interest regardless of the use of bonding and monitoring. Bonding costs are costs incurred by agents. Positive Accounting Theory has been largely criticized that it does not offer prescriptions and that the theory do not offer a way of improving the accounting activity. This theory has also been criticized that it has invalid assumptions that all activities are driven by a need to maximize the wealth of the shareholders. An efficient market is the market where the market price is considered to be an impartial estimation of the actual value of the project (Nisar, Hanif, 2012). The three forms of the market efficiency includes; Weak form effectiveness which suggests that the market is considered to be effectual reflecting all the data of the market. This hypothesis implies that the rate of return on the market must be autonomous and historical rates of returns have no effects on the future rates. Semi-strong efficiency denotes that the marketplace is effective thus replicating all publicly accessible information and data. This hypothesis undertakes that inventories adjust faster so as to fascinate new data of the market (Sewell, 2011). Strong form efficient market indicates that the market is effective and thus reflecting all the data both private and public and incorporates the semi strong and weak form market efficiency. Corporate Social Responsibility is considered to be a company initiative to assess and take responsibility for a firms effects on social and environmental wellbeing. This aspect generally applies to efforts that go beyond what may be needed by environmental protection group or regulators. Environmental issues that affect accounting includes; an economic environment that basically exerts an important influence on the financial reporting frameworks (Schneider, Schmidpeter, 2012). Political environment is another environmental issue that affects the accounting environment because financial reporting is usually affected by the manner in which a country organizes its economic relations. Legal and tax environment also have a direct influence on how accounting is regulated in the environment (Tai, Chuang, 2014). This issue has a significant impact on the development of accounting practices and standards. Social reporting is considered to be the practice of communicating the social and environmental influences of corporations economic activities to specific interests groups in community and the community altogether. Social accounting can be basically categorized into the following types; managerial, national social income accounting, social accounting in profit-making companies, financial social accounting in profit-making firms, social auditing and managerial or financial social accounting for profit-making companies (Iwata, Okada, 2011). Corporate accountability is considered to be the performance of a publicly traded firm in non-financial areas such as sustainability, social responsibility, and environmental performance. One of the factors that have led to the increased corporate social accountability is the subsequent campaigns that have been lobbied so as to force the companies to be socially responsible to the environment. Another factor is the increased concerns with responsible or ethical investing that has led to diverse forms providing these particular annual corporate accountability reports to their sponsors, financiers or regulators (Deegan, 2013). Diverse governments often play a significant role in regulating environmental issues globally. These governments often ensure that appropriate corporate social responsibility mechanisms have been utilized by the firm so as to reduce any negative effects to the public. These governments also ensure that firms operating in a particular region should offer social amenities such as hospitals, health care and clean water to the people living in the region as this will reduce the aspect of poverty among the society (Kabir, 2011). Governments also play a significant role in ensuring that these companies assist the local people to acquire employment opportunities as this aspect will basically reduce poverty among the citizens. Yes, I think that many companies in the world comply with the aspect of social reporting since it involves the process of communicating the social and environmental impacts of organizations economic activities to specific interests groups in society and also the society as a whole (Tai, Chuang, 2014). Social reporting is vital to the country since it will enhance the aspect of unity among the companies and the society. References Bonin, H. (2013).Generational accounting: theory and application. Springer Science Business Media. Deegan, C. (2013).Financial accounting theory. McGraw-Hill Education Australia. Frias?Aceituno, J. V., Rodriguez?Ariza, L., Garcia?Sanchez, I. M. (2013). The role of theboard in the dissemination of integrated corporate social reporting.Corporate Social Responsibility and Environmental Management,20(4), 219-233. Iwata, H., Okada, K. (2011). How does environmental performance affect financialperformance? Evidence from Japanese manufacturing firms.Ecological Economics,70(9), 1691-1700. Kabir, H. (2011). Positive accounting theory and science. Nisar, S., Hanif, M. (2012). Testing weak form of efficient market hypothesis: Empiricalevidence from South-Asia.World Applied Sciences Journal,17(4), 414-427. Radebaugh, L. H. (2014). Environmental factors influencing the development of accounting objectives, standards and practices in Peru.The international Journal of Accounting Education and Research. Urbana,11(1), 39-56. Sewell, M. (2011). History of the efficient market hypothesis.RN,11(04), 04. Schneider, A., Schmidpeter, R. (2012). Corporate social responsibility.Verant wortliche Unter nehmens fhrung in der Praxis, Berlin ua. Tai, F. M., Chuang, S. H. (2014). Corporate social responsibility.Ibusiness,6(03), 117.