Advanced Accounting for Business (2500 words)

Statement: Although the basic accounting concepts define the assumptions underlying the preparation of financial statements and the process of preparation in the UK is well regulated1, this does not entirely eliminate the need for judgements/estimations to be made by preparers of accounts and in many areas still leaves significant choice in accounting treatments. However, in some instances companies have exploited loopholes in financial regulation in order to gain advantage or present figures in a misleadingly favourable light. Discuss the above statement and explain the implications arising from it. Guidance: In UK Financial Reporting, concepts and regulations determine the boundaries that that are set for companies when producing financial statements. However, some flexibility is still permitted and you should explain why and how this can arise. With reference to specific accounting concepts and regulations, your answer should include examples of instances where choices are permitted or judgements can be made regarding accounting treatment and the implications arising from such choices. However, some companies will take advantage of loopholes in the regulatory framework and not comply with the “spirit of the standard”. This means that, although it is not fraud, they can use the flexibility permitted in UK accounting regulation to manage the measurement and presentation of the accounts so that the view given to users of the financial statements is favourable. Your answer should contain examples of how companies have achieved this. References This is a research-based assignment and as far as possible you should refer to appropriate books, professional journals and academic journals. All sources of information should be fully cited in a list of references. Other notes  Your answer must be in essay form, making suitable use of sub-headings  You must include a word count at the end  Font size 12 (either Times Roman or Arial)  Use paragraphs appropriately  The coursework must be typed and double-spaced  Do not rely solely on the internet for research  Ensure that you answer the question – all parts of it  Take care with presentation  Insert page numbers  You should not put your name on the coursework – other than on the front sheet  Pay attention to spelling and grammar