Question Some people argue that having various organizations establish accountin

Question

Question

Some people argue that having various organizations establish accounting standards is wasteful and inefficient. Rather than prescribed accounting standards, each company could voluntarily disclose the type of information it considered important. If an investor wants additional information, the investor could contact the company and pay to receive the required information.



Required

Comment on the appropriateness of this viewpoint. Prepare a report outlining the need for regulation in accounting and why a free market for accounting information is not ideal.

Explanation / Answer

Answer:   if we accept the argument then the results will be as follows :

              _ various companies disclose various results according to their importance

               _ then no company consider the recqired information of the investor

               _ mainly public,govt,employes,owners,and creditors recqire certain standard important  

                  results from the company.

                _ as the company is disclosing the results according to its iomportance it may not match  

                   the recqirements of the above people.

_ investors and others those who recquire the information has to pay the money.

why should we reject the opinion :

_ according to GAAP the accounting practices should be standard and similar world wide

but the accounting practices by various companies will be different if we consider this openion.

_ and mainly the policies of accountig should be consitent but they will change frequently if

we accept the openion.

_ according to Relavance and Materiality conventions the disclosed results should be relevan tand material (significant)

_ and mainly payment of money for the information will leads to accounting mal practices and hence it leads to scams.

conclusion :

                      There should be a standard rules and practices of accounting for the convinience of owners ,employees,creditors,public,govt to know the results of the companies. for this there should be standard concepts and conventions so that the companies will disclose the significant business results.

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