Jekyll and Hyde1

Jekyll and Hyde

Name of Student
Admission Number
Department
University
City/State
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(b)The set of accounts shows the true and fair value of the company. This is so because in
preparation of the financial statements the company has complied with the required set of
regulations as stated by IAS 1. The company has included all the items required in the
preparation of the income statement and the statement of financial position. The company has
utilised the required method of preparation which is the accrual basis as recommended by
IAS 1. The company has also complied with the reporting period recommended. IAS
recommends that a company should report its financial results either quarterly or at the end of
the year. The depreciation methods used by the company is also the one recommended by the
accounting standards that is the straight-line basis and the reducing balance method.
(C) The preparers of accounts have too much freedom during the preparation of the financial
statements. The financial aspect would be of benefit if all the accountants globally conform to
similar accounting standards. If the preparers conform to a similar accounting standard there
will be reduction in fraud and manipulation of the accounting transactions (Barth et.al 2008).
Conformity to a similar accounting standard will make it difficult for management to
misrepresent any financial information. This will reduce the workload of Auditors in the
company since they will be able to refer to the accounting policies when they are performing
their tasks. Conformity of the companies to similar accounting policies will improve the
competition between companies since they will be able to compare and analyse the financial
performance of various companies and come up with the appropriate decision.
Conformity to similar accounting policies also would improve the reliability of the financial
statements. This will assist the shareholders and potential investors in making investment
decisions (Hung and Subramanyam 2007). Many investors base their decisions according to
the information or data provided by the companies. If the company presents its accounting
data that conforms to the accounting standards, more investors will be attracted to invest in
the company.
Using a similar accounting standard in preparing financial statements leads to uniformity in
accounting. This enables accountants in the world to stick to similar policies. The accountants
will have an easy time during the presentation and will be able to consult with each other and
share their opinions (Meeks and Swann 2009). This will also enable the accountants to
perform benchmarking in any company of their choice since they are using similar policies.
Utilisation of similar accounting standards increases the reliability of accounting information.
The users of the accounting information will be able to use the accounting information in
making their decisions (Meeks and Swann 2009). The management uses accounting
information to determine whether the business is a going concern by analysing the profit and
loss of the company. This also enables the management to determine when to pay dividends.
The management will always use the information that conforms to the accounting standards
for better decisions.
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References
Barth, M.E., Landsman, W.R. and Lang, M.H., (2008). International accounting standards
and accounting quality. Journal of accounting research, 46(3), pp.467-498. Available
at: https://www.jstor.org/stable/40058143

Hung, M. and Subramanyam, K.R., (2007). Financial statement effects of adopting

international accounting standards: the case of Germany. Review of accounting
studies, 12, pp.623-657. Available at:
https://link.springer.com/article/10.1007/s11142-007-9049-9

Meeks, G. and Swann, G.P., (2009). Accounting standards and the economics of standards.
Accounting and Business Research, 39(3), pp.191-210. DOI:
10.1177/09718907211003715