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1 The University of Birmingham College of Social Sciences Birmingham Business School Department of Accounting and Finance Accounting Theory

(07 !7"#

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$are) Schroeder University *ouse +oom (,, 0( ( -(- !,.! m/a/s/schroeder01ham/ac/u) %ffice *ours2 3ednesday (04(

2 Accounting Theory (07 !7"# $odule Description Introduction Accounting Theory is part of a 20 credit second year module assessed together with Company Accounting and with which it is linked. The module is compulsory for students on the BSc Accounting and inance programme !ut may !e taken as an option !y students with the rele"ant prere#uisite first year modules $Basic Accounting%. &odule description The module will co"er the following topics' ( alternati"e measurement systems to modified historical cost accounting such as economic income) current purchasing power accounting) replacement cost accounting) cash flow reporting) depri"al "alue accounting) current cost accounting and real terms $fully sta!ilised% accounting* the origins of conceptual framework approaches to financial reporting* issues in the measurement of depreciation.

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A more detailed list of the topics to !e co"ered in the lectures is gi"en !elow. &odule outcomes By the end of the module) students will !e e+pected to !e a!le to' ( ( ( e+plain and e"aluate the alternati"e measurement systems which may !e selected for financial reporting) descri!e and e+plain the origins of the conceptual framework approach to financial reporting* understand and e"aluate the characteristics of different depreciation methods.

&odule deli"ery The module is deli"ered using traditional lectures) two hours per week. The te+t of each lecture will !e made a"aila!le on ,e! CT !ut copies will also !e pro"ided in the lectures. Any spare copies left at the end of the lecture will !e placed in the -ndergraduate .ffice $/00% in -ni"ersity 1ouse. 2ote) howe"er) that neither copy will include numerical solutions to the illustrati"e pro!lems sol"ed during the course of the lecture so attendance is strongly recommended. A list of suggested readings accompanies each topic. In the e+amination higher marks will !e awarded to candidates who can demonstrate familiarity with the suggested readings. There are no classes for this module. 1owe"er) a"aila!le on ,e! CT and in hard copy is a set of e+amination standard self test #uestions. Students making a genuine attempt at these #uestions and handing them in !y the due date will get them returned with a

0 literal grade assigned and a typed suggested solution. Self test #uestions handed in late) for whate"er reasons) will not !e marked. The self test #uestions do not form part of the formal assessment for this module !ut students are ad"ised to attempt them as they are illustrati"e of the sorts of #uestions that will appear in the e+amination. There are no lectures during week 3 of the module which has !een set aside for students to re"iew their work on these #uestions and &arek Schroeder will !e a"aila!le to deal with #ueries during the &onday and Tuesday of this week. An additional set of self test #uestions $to !e handed in after the 4aster "acation% will !e made a"aila!le for re"ision purposes towards the end of the semester. &odule assessment The module is assessed 5ointly with Company Accounting and is !y e+amination only. The summer e+amination lasts three hours) half of which $607% will !e de"oted to Accounting Theory in a separate section in which candidates will !e re#uired to answer any two of the four #uestions set. The supplementary $re(sit% e+amination will also last three hours of which one and a half $607% will !e de"oted to Accounting Theory in a separate section in which candidates will !e re#uired to answer any two of the four #uestions set. &odule administration 8ectures will !e gi"en !y &arek Schroeder $-ni"ersity 1ouse 9oom 166 : 0121 ;1; <60<% and any #ueries regarding the module should in the first instance !e directed to him either during lectures or during normal office hours which are scheduled for ,ednesday mornings !etween 10.00 and 12.00. Appointments may !e made outside these hours !y personal arrangement. Appointments are made !y contacting his secretary =aren 1anson either in person $-ni"ersity 1ouse 9oom / ;> ( 0121 ;1; <600% or !y electronic mail $k.hanson?!ham.ac.uk%.

Accounting Theory (07 !7"# Schedule of 5ectures

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Topic Introduction to the module Introduction to financial accounting theory 4conomic income and the @aish criti#ue

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Current purchasing power accounting 9eplacement cost accounting 9eal terms $fully sta!ilised% accounting Cash flow reporting Aepri"al "alue accounting and fair "alues Current cost accounting Self test #uestions re"ision week Aepreciation theory Aepreciation and changing prices Conceptual frameworks ( origins

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6 +eading 6uide All references are to the module !i!liography which follows. 2ote that simultaneous references to Ba+ter $1B3;%) 8ee $1B36% and ,hittington $1B30% are gi"en as alternati"es only. Set te+t references are to the fourth edition of Ale+ander et al. $200B%.

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5ecture Topic

+eading

Introduction to financial accounting theory

,hittington $1B3<% Ale+ander et al. $200B%' 101(10> Ale+ander et al. $200B%' <1(>B Bromwich $1BB2%' 62(>3 1icks $1B;<C1B3<% @aish $1B>3% Ale+ander et al. $200B%'111(12B ASC $1B>;% Ba+ter $1B3;%' >B(102 ICA4, $200<% 8ee $1B36%' 100(16> ,hittington $1B30%' <0(10B Ale+ander et al. $200B%' 31(B; Ba+ter $1B3;%' 100(1<3 4dwards and Bell $1B<1% ICA4, $200<% 8ee $1B36%' >;(B0 ,hittington $1B30%' 11<(121 Ale+ander et al. $200B%' 11>(11B ICA4, $200<% Sweeney $1B06%

4conomic income and the @aish criti#ue

Current purchasing power accounting

9eplacement cost accounting

9eal terms $fully sta!ilised% accounting

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Cash flow reporting

Ale+ander et al. $200B%' B6(10B Ba+ter $1B3;%' 132(206 ICA4, $200<% 8ee $1B3;%' 60(>2 8ee $1B36%' B1(10; &c&onnies $1B33% ,hittington $1B30%' 122(123 Ale+ander et al. $200B%' 101(10B ASC $1B30% Ba+ter $1B3;%' 132(206 ICA4, $200<% 8ee $1B36%' 106(121 Dan Ei5l et al. $200<% ,hittington $1B30%' 101(10< Ale+ander et al. $200B%' 11B(12B ASC $1B30% ICA4, $200<% 2oke $1B36%

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Aepri"al "alue accounting and fair "alues

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Current cost accounting

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Self test #uestions re"ision week Aepreciation theory

F4+ample 8tdG Ale+ander et al. $200B%' 26>(230 Ba+ter $1B>1%' 1(110 Ale+ander et al. $200B%' 231(2B0 Ba+ter $1B3;%' 20<(230 ASSC $1B>6% ASB $1BBB% &ac"e $1B31% 9utherford $2000%' 1(63

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Aepreciation and changing prices

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Conceptual rameworks ( .rigins

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Bi1liography Fhttp'CCwww.readinglists.!ham.ac.ukG Accounting Standards Committee $ASC% $1B>;% @ro"isional Statement of Standard Accounting @ractice $@SSA@% 2o. >' Accounting for Changes in the @urchasing @ower of &oney. Accounting Standards Committee' 8ondon. Accounting Standards Committee $ASC% $1B30% Statement of Standard Accounting @ractice 2o. 1<' Current Cost Accounting. Accounting Standards Committee' 8ondon. Accounting Standards Steering Committee $ASSC% $1B>6% The Corporate 9eport. Accounting Standards Steering Committee' 8ondon. Ale+ander) A.) Britton) A. and Horissen) A. $200B% International inancial 9eporting and Analysis) ;th edition. Cengage 8earning 4&4A' Ando"er) -=. Ba+ter) ,.T. $1B>1% Aepreciation. Sweet and &a+well' 8ondon. Ba+ter) ,.T. $1B3;% Inflation Accounting. @hilip Allan' .+ford) -=. Bromwich) &. $1BB2% inancial 9eporting) Information and Capital &arkets. @itman' 8ondon. 4dwards) 4... and Bell) @. $1B<1% Theory and &easurement of Business Income. -ni"ersity of California @ress' California) -SA. inancial Accounting Standards Board $ ASB% $1BBB% Statements of inancial Accounting Concepts. inancial Accounting Standards Board' Connecticut) -SA. 1icks) H.9. $1B;<C1B3<% IIncomeJ in @arker) 9.1.) 1arcourt) /.C. and ,hittington) /. $eds.% 9eadings in the Concept and &easurement of Income) 2nd edition) pp. 102(110. @hilip Allan' .+ford) -=. ICA4, $200<% &easurement in inancial 9eporting. 8ondon' ICA4,. 8ee) T.A. $1B3;% Cash low Accounting. Dan 2ostrand 9einhold' ,okingham) 4ngland. 8ee) T.A. $1B36% Income and Dalue &easurement' Theory and @ractice) 0rd edition. Dan 2ostrand 9einhold' ,okingham) -=. &ac"e) 9. $1B31% A Conceptual ramework for inancial Accounting and 9eporting' The @ossi!ilities for an Agreed Structure. Institute of Chartered Accountants in 4ngland and ,ales' 8ondon.

&c&onnies) @.2. $ed.% $1B33% &aking Corporate 9eports Dalua!le. Institute of Chartered Accountants of ScotlandC=ogan @age' 8ondon. 2oke) C.,. $1B36% I inancial reporting and changing prices : a re"iew of the issuesJ) .mega) 10$0%' 1;6(1<6 $&ay%. @aish) .,. $1B>3% ICapital "alue and incomeJ in Ba+ter) ,.T. and Aa"idson) S. $eds.% Studies in Accounting) 0rd edition) pp. 1>B(131. @arker) 9.1.) 1arcourt) /.C. and ,hittington) /. $eds.% $1B3<% 9eadings in the Concept and &easurement of Income) 2nd edition. @hilip Allan' .+ford) -=. 9utherford) B. A. $2000% An Introduction to &odern inancial 9eporting Theory. @aul Chapman' 8ondon. Sweeney) 1.,. $1B06% IThe Techni#ue of Sta!iliKed AccountingJ) The Accounting 9e"iew) Hune' 13<(206. F9eprinted in' Eeff) S.A. $ed.% $1B><% Asset Appreciation) Business Income and @rice(8e"el Accounting' 1B13(1B06. 2ew Lork' Arno @ress.G Dan Ei5l) T. and ,hittington) /. $200<% IAepri"al "alue and fair "alue' a reinterpretation and a reconciliationJ) Accounting and Business 9esearch) 0<$2%' 121(100. ,hittington) /. $1B30% Inflation Accounting' An Introduction to the Ae!ate. Cam!ridge -ni"ersity @ress' Cam!ridge) -=. ,hittington) /. $1B3<% I inancial accounting theory' an o"er"iewJ) British Accounting 9e"iew) Autumn.