IZZATI FARHAN BT SHAMSUDDIN AC 087323 NOR AYUNI ATIQAH BT MOHAMED RUSLAN AC 087371 SECTION 1 AM
1. DISCUSS THE BENEFITS OF STUDYING ACCOUNTING HISTORY a) Accounting history can be as a guidance to make an improvement to accounting practices. b) create the new accounting theory and practices more recognition and measurement
LITTLETON (1969) OUTLINED 7 PRE-CONDITIONS NECESSARY FOR THE DEVELOPMENT OF DOUBLE ENTRY BOOKKEEPING. WHAT ARE THEY AND WHY DID LITTLETON CONSIDER THESE ESSENTIAL? W THE ART OF WRITING -In the past, Many business owner had little education. -Nowadays more businessmen are able to read and write. -The availability of paper make written records.
A ARITHMETIC -Arabic numerals were easy in calculate. -Movement away from roman numerals to adoption Arabic numerals facilitated the adoption of double entry book keeping.
C PRIVATE PROPERTY -In the past, most of the property were shared or government owner. -Double entry book keeping provided a clear framework to report on this.
M MONEY -Money is a comparable common language that things can be converted into. -Since it is able to record value, there is a need for double entry book keeping exists. C CREDIT Credit transaction is much more complex than cash transaction. One must keep tracking its accounting receivable until the money is received. Double entry book keeping system enables business to record its account receivable and keep tracking on this record. C COMMERCE -There is a need to keep record in a way to ensure it can be understand in a wide range. - The growth in commerce is a catalyst for adoption of double entry book keeping system. C CAPITAL -Double entry book keeping system helps companies to provide a fair view to investors.
3. EXPLAIN WHY THE DOUBLE ENTRY WAS SUPERIOR TO SINGLE ENTRY DURING THE AGE OF DOUBLE ENTRY? Enable transactions to be recorded in a more systematic and orderly manner. By means of a trial balance provided an arithmetical check on records and a balancing of the books. Internal control elements inherent in double entry allowed the division of duties between bookkeepers facilitating specialisation, thus reducing errors and making fraud more difficult.
4. DURING THE AGE OF STAGNATION WHY DID SINGLE ENTRY ACCOUNTING PERSIST AND WHY WERE BUSINESSES SLOW TO ADOPT THE DOUBLE ENTRY SYSTEM Small size of businesses and the relatively few transactions involved The average business was small with little distinction between ownership and management The ability of double entry to summarise and report the success or failure of a business for a specified period of time was not valued at that time
5. WHAT CONCEPTS WERE ABSENT FROM ACCOUNTING RECORDS DURING THE SO-CALLED AGE OF STAGNATION? THE CONCEPTS OF PERIODICITY AND MATCHING. EXP: CONCEPT OF PROFIT WAS NOT REGARDED HIGHLY. DISREGARDING ASSET DEPRECIATION, WRITING OF BAD DEBTS. NO DISTINCTION BETWEEN REVENUE AND CAPITAL ITEMS AND PRIVATE AND BUSINESS EXPENDITURE. 6. WHY WAS THE ROYAL MAIL CASE IMPORTANT TO THE DEVELOPMENT OF ACCOUNTING? YOUR ANSWERSHOULD RELATE TO THE ISSUES OF RECOGNITION AND MEASUREMENT. The parent company was able to report profit even though the group as a whole was suffering heavy losses through inter company dividend transfer There was no requirement that group account be consolidated Companies act requires that UK companies to consolidate group account Royal Mail case. 7. EXPLAIN THE POSSIBLE FACTOR THAT INFLUENCING ACCOUNTING REGULATION AND PRACTICE GLOBALLY. ANSWER Accounting principles Accounting principles provide a general framework of reference by which accounting practice can be evaluated and guide the development of new practices and procedures. Adoption of financial reporting standard To standardize all the accounting report so that users from worldwide can better assess the financial report and make decision making.