* Financial statement disclosure has been expanding * Mandated information disclosure justified b/c it minimizes or reduces a “market failure” to provide information voluntarily. W&Z suggest regulation is a response to market failures associated w/ private production of information. They conclude that market failure arguments are fallacious and disclosure regulation may not achieve a social optimum. In general, they’re arguments are against accounting regulation. Purpose: To review critically anti-regulation arguments and their link to positive accounting theory.
For this reason, the only solution is to have a good risk management plan in place that focuses on the larger threats. So this leads to the question, “what kinds of risks should a company be concerned with?” The author goes on to say that a big part of risk management is understanding the degree of the threat. There are many threats that can bring a company to a complete halt. In the insurance industry for example, anything that prevents the company and its agents from making claims payments, maintaining proper cash reserves, operational risks, financial risks, and especially any risks that involve the IT systems is a threat, because a failure of the systems that keep the company running can be disastrous. Financial institutions such as banks deal with these types of issues on a daily basis because of constant cash flow.
For instances, company can choose cost model or revaluation model for property, plant, and equipment. The inventory must be measured at the lower of cost or net realizable value. In addition, according to Mautz (1973), it stated that if who rely on the financial report that measured on historical cost to make decision, found that the information is not useful, then the accounting method will change since it have been made. However, during the times of rising prices, the historical cost accounting has limitations. This is because according to Elliot (1986), it stated that historical cost assumes money holds a constant purchasing power.
SHOULD ETHICS BE TAUGHT IN ACCOUNTING SUBJECT? Nowadays ethics should be taught in the accounting field. This is because accounting profession relies on an accountant. Accountants are people who have a wide range of behavior. Attitude and behavior of each person is different, so accounting ethics need assistance.
It was cited in the case that CPDW CEO realized that their basic metric for pricing square feet of space utilized is too narrow. According to Culp (2012); “companies should consider their operating models, in an effort designed to define an optimum balance between financial efficiency and assuredness of a stable supply chain” (Para. 15). CPDW failure to upgrade their supply chain performance metrics program revealed the integration of risk management into supply chain management. As this goes hand-to-hand, that companies need to change their focus from a cost center to an investment center.
Strategy and Economics of Vertical Chain Vertical chain in its simplest form starts with the acquisition of raw material and ends with the distribution and sale of finished goods. The strategy to participate in one activity (one industry) or many activities (many industries) along the value chain has become a key consideration of today’s corporate planning. Firm needs to make a decision it will only manufacture the product or would engage in retailing and after sales service also. We will be discussing the Vertical Boundaries of the firm from the perspective of the Vertical chain and the production process and examine how firms take a make-buy decision. We will also look at bureaucracy issues that large firms suffer which are due to the non-performing managers and workers or the divisions, for e.g.
Lessons learned from this topic and case study: 1. Managers need to be able to estimate the costs of different responsibility centres and products to assist with monitoring the performance of different departments and also to assist with decision making about product pricing, profitability of individual products, assist with decisions when making changes to product lines and various other managerial requirements such as controlling costs and valuing inventory for financial statements. 2. Dividing the business into cost objects such as departments or products can assist with creating greater accuracy when allocating costs to each ‘cost object’. 3.
A company bias toward overreliance on operational effectiveness 2. The absence of an architecture that functionally coordinates strategic analysis and strategic implementation with strategic thinking 3. A failure to appropriately identify who should be involved in the strategy process, how they should be involved, and when they should be involved All three root causes can be simultaneously addressed through a restructuring of and augmentation to UPS’s overall strategy process that includes: A. Leveraging internal corporate communication channels to continually communicate messages that reposition strategic thinking as a company value that is not at odds with operational effectiveness, but rather one that directs and creates the need for operational effectiveness B. Dividing the Corporate Strategy Group (CSG) into two divisions: The Strategic Analysis Division and the Strategic Implementation Division C. Creating a network of Regional Advisory Groups (RAGs) made up of operations managers and employees that discuss strategy at a regional level and that interact with the Strategy Advisory Group (SAG) on quarterly basis D. Modifying the most recent version of its scenario
From an accounting prospective, the major problem with the calculations mentioned in the article is determining the rate of return and length of the marketing investment. While the initial value of the “investment”, i.e. marketing expense, can be easily determined, determining the real value after the investment has been made has the potential to be biased without a commonly used measurement. The value of the investment could also fluctuate from year to year based on the companies’ profitability even though marketing had not direct
Reichard Maschinen: Teaching Commentary Essay by MBA 2010, University, Master's, April 20100 votes OVERVIEW This case deals with cost analysis for assessing the economics of a product transition facing Reichard Maschinen, but it also involves the broader spectrum of business issues related to the transition. At one level, the economics of the situation need to be brought into focus; fixed costs, marginal costs, and sunk costs must be separated and evaluated for their "relevance" to the decision. At another level, when the marketing and manufacturing issues are considered, the complexity of the decision becomes apparent. Financial signals say that steel rings are more profitable; marketing signals say that the future belongs to plastic rings; manufacturing signals say we should perhaps "buy" rather than "make." The main dilemma of the case is "How long can the firm stay with the substantially more profitable, but technologically obsolete, steel rings while still holding to its strategy of being a top quality producer at a fair price?"