State University of Bangladesh

Midterm Assignment
Course Code: ACT 202
Date of Submission: 22 Aug, 2020.

Submitted to
Rian Binte kamal
Lecturer, Department of state
university

Submitted By
Name: Readoan Khan Hridoy.
ID: UG 01-51-19-014
 Question 01:

Define accounting. Why accounting standards

change over time?

Accounting:

The accounting process includes a review, examination and reporting of these

transactions to supervisory agencies, regulators and collectors.

We can describe accounting as "the method of defining, evaluating and transmitting

economic information to make informed judgments and decisions of users of the
information."

They are mostly financial statistics, which is reported in terms of money. Accounting
is also a method to assess and report on the operations of successful organizations.
The accounting process offers information for companies as a calculation and
communication mechanism that facilitates informed decisions and judgements by
data users.

Reason accounting standard change

The major explanations for the change in accounting methods are: (1) A desire to give
a clearer image of income. (2) A willingness to increase cash flows by raising income
taxes. (3) Mandate of the Financial Accounting Standards Board to adjust accounting
methods. (4) A duty to follow the standards of the industry.
(5) A willingness to give a better indicator of the profits of the company.

In general, accounting practices are not modified, because this changes the
comparability of financial transactions over time. Always change the policy if an
adjustment is needed by the applicable accounting system or if the change results in
more accurate and relevant information.
 Question 02:
a) Describe principles of conceptual
framework.

There are 4 principles in conceptual framework:

1.Measurement: A mixed-attribute framework enables the

use of various bases of measurement.
Historical cost principle: Acquisition expenses are considered to be a valid basis
for accounting for a company's assets and liabilities. Historical costs have benefit
over other measures, because they are considered verifiable.
Fair Value Principle: Fair value is defined as the price that should be earned on the
measurement date for selling an asset or being charged to move a liability in orderly
transaction between market participants.

2.Revenue recognition: Revenue is recognized by the time when the duty to

perform is fulfilled.

3.Expense recognition: Expense identification is linked to net asset shifts and

earnings revenues. The theory of acknowledgment of expenses is applied by
balancing effort (expenses) with achievement (revenues) according to the concept
of expenses.

Product costs: Things as material, labor , and overhead, are added to the
commodity and the goods are known for sale in the same time.

Period costs: These as the salaries of the officers and other operating costs, are
added to the period and included in the amount sustained.

4.Full disclosure: The accountant should provide adequate details in the preparation
of the financial statements to affect the judgment and decision of an informed
person. There needs to be a series of judgmental trade-offs.
 Question 02:

b) Is conceptual framework related with ethics?

Exercise your judgment to answer this question.

Yes, conceptual framework is related with ethics. Because the conceptual

framework takes on different factors which contribute to ethical decision-making.

Professional competence and due care:

commitment to professionalism

avoid illegal and unethical conduct

Integrity:

exhibit the absolute level of integrity

Objectivity:

Comply with directions of legitimate courts

Professional behavior:

No view shared about guilt or innocence.

Confidentiality:

Hold information confidential.

Independence:

Reveal all concerns that could impact the result

 Question 03:
a) Describe components of accounting and information
systems

In an accounting system, there are five principal components. Each part has a
different job, and takes different steps in the process of financial reporting.

1. Source documents: The legal records that follow company transactions are the
source documents. These records are created as a written record of a deal or
transaction. The record of an initial transaction is documented by records including
invoices, sales orders and receipts at the end of a business case.

2. Input devices: tooling for inserting transaction details into the accounting
system is like bar code scanners, keyboards and modems. Such tools require
employees to access the system's source records.

3. Information Processors: from the input tools, take the raw data and bring it
into the news, logs and reports. Processors such as software and machines, process
the data so that decision makers can take advantage of it.

4. Information storage: is the system portion that stores reports and leads
generated by information processors. Most modern computer-based accounting
systems, which typically include servers and hard drives, make storage devices
available. Nevertheless, file cabinet storage systems are still considered.

5. Output devices: like displays, printers, and projectors, all devices that store
system information in a useful manner are used to display it.
 Question 03:

b) Illustrate accounting cycle

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THtHAT’S

That’s all
THAT’S ALL