Historical cost accounting is meaningless in todays complex business Essay

Historical cost accounting is meaningless in todays complex business environment - Essay Example Historical cost accounting and its alternatives have uses for different firms, markets, management and investment strategy, and auditing approaches, and there is no reason why they cannot both be used even within the same financial report! Historical Cost Accounting Summary Historical cost accounting is the process of accounting based on the historical value of an asset at the time of purchase after taking into account depreciation (Williamson, 2003; National Audit Office, 2009, 88). Historical cost accounting was once a near-universal standard, but now many different standards may threaten coherence (Cao). Disadvantages Historical cost accountings do have serious limits, and they deserve to be addressed. First: Depreciation is arbitrary because it's based on out-of-date values and estimations rather than any real benchmark (Greuning and Koen, 2001, p. 47). The depreciation charges don't end up making a realistic estimation of the actual replacement cost either. However, aside from t he advantage of keeping the information all self-contained, historical cost accounting also tends to report information from the firms' perspective: This asset was bought at price X and term Y. Second: Profits will be exaggerated because actual trading will involve replacing assets, which means giving up old assets which are undervalued (Gruening and Koen, 2001, p. 47). However, not all assets are fungible at full price. Historical cost accounting has the advantage that it lets the company recall what the product was worth at any given time. Third: There are possible negative tax implications (Gruening and Koen, 2001, p. 47). Overstating profits by undercharging the depreciation value (e.g. if I buy land twenty years ago, the depreciation isn't on the market value at that time but the value of the land currently as it depreciates or appreciates) and charging cost based on the historical costs of inventories can cause higher tax charges. The value of labor is also not included or dev eloped by historical cost accounting (Stovall, 2001, p. 2-4). Traditional accounting theories, in line with neoclassical economic theory, tend to view everything that is quantifiable as all that makes up an economy (Stovall, 2001, 2-4). Human capital, which is harder to measure and has growth rates which are not easily predictable, do not easily fit into the model and thus are jettisoned. Then again, Stovall (2001, p. 2-4) makes clear that fair value, current purchasing power and net present value accounting do not do this either. The failure to account for inflation, aside from the other problems already discussed, means that the firm may not be protecting its capital base (Gruening and Koen, 2001, 47). It also makes it hard to benchmark performance because different market conditions aren't being accounted for, allowing management to sit on their laurels since it's difficult to see if the company's value is really growing even after controlling for inflation. That having been said , inflation-keyed metrics can lull investors into a false sense of security (Fukui, 2003, p. 2). In fact, it may not be fair to measure executives against inflation of the market in general, given that the market is a cross-section which includes a mixture of high and low risk growths whereas individual firms are not. Another issue

Effective Programs For Hispanic Students Essay Example | Topics and Well Written Essays - 7500 words

Effective Programs For Hispanic Students - Essay Example lthough schools cnnot chnge the socil relity, they cn crete different society within their wlls. Getting to know the students nd their fmilies s well s welcoming their lnguges nd cultures cn build coherent community where the bilingul progrm becomes n integrl prt of the school. Improvement of bilingul progrms necessittes fundmentl chnges within the whole school becuse the overll qulity of the school will ffect the bilingul progrm. For the most prt, good bilingul progrms exist within good schools. To crete sound context for bilingul lerners schools should set cler gols, crete bilingul biculturl society, integrte the bilingul progrm into the school community, know the bilingul students, provide ledership nd support for the bilingul progrm, set high expecttions for bilingul students, hire qulity personnel willing nd prepred to work with bilingul students, estblish productive prtnerships with prents nd communities of the bilingul students. Commitment of principls nd minstrem stff to the progrm nd the students mkes it possible for bilingul progrms to be integrted into the whole school. ll stff nd not only the bilingul stff should be responsible for the bilingul students' eduction. In turn, the bilingul stff should prticipte in generl school ctivities nd decision mking. When curriculum improvement or specil progrms re introduced, the bilingul progrm should lso be included. Regrdless of how integrtion is implemented, school mission, curriculum, nd environment must reflect the presence of students of different lnguges nd cultures. Otherwise, integrted nd two-wy progrms tht succeed in bringing both groups of students together will remin isolted within the school. In order to mnge the sitution when the school district oppose introduction of bilingul eduction, necessry strtegies should be pplied. First of ll, it is importnt to mke bilingul students need to feel tht their school is community tht cres for them, trets them s individuls, nd wnts them to succeed. In effective schools, dministrtors nd techers know their students nd students know ech other. Knowledge of the students nd personliztion of the teching re keys to good teching. Becuse techers relte to students both s lerners nd s children or dolescents, techers must estblish how they will ddress these two types of reltionships, wht they need to know bout their students, nd how they will cquire this knowledge. The techer--lerner reltionship implies involvement between techers nd students round subject mtter, wheres dult--child or dult--dolescent reltionships re more personl nd intimte. Focusing on both types of reltionships bridges the gp between school nd the world outside it, gp tht is especilly importnt for mny bilingul students whose world differs gretly from school. Techers working with young students hve succeeded in combining both types of reltionships in the context of the clssroom. For exmple, Czden, Crrsco, Mldondo-Guzmn, nd Erickson ( 1980) observed Mexicn mericn techer working with first-grde Spnish spekers. Every morning s they st in circle, she collected homework nd ddressed the children with endering terms, sking questions bout them nd their fmilies. In successful high schools these reltionships hve been somewht seprte with the