ACCO 400 Study Guide - Final Guide: Coase Theorem, Cognitive Dissonance, Externality

• School: Concordia University
• Department: Accountancy
• Course: ACCO 400
• Professor: Ahmad Hammami

Document Summary

Acco 400 final review: chapter conclusions: accounting under ideal conditions: Ideal conditions: rele(cid:448)a(cid:374)(cid:272)e: (cid:862)p(cid:396)o(cid:448)ides i(cid:374)fo(cid:396)(cid:373)atio(cid:374) a(cid:271)out the fi(cid:396)(cid:373)"s futu(cid:396)e e(cid:272)o(cid:374)o(cid:373)i(cid:272) p(cid:396)oje(cid:272)tio(cid:374)s(cid:863, relia(cid:271)ilit(cid:455): (cid:862)faithfull(cid:455) (cid:396)ep(cid:396)ese(cid:374)ts the fi(cid:396)(cid:373)"s fi(cid:374)a(cid:374)(cid:272)ial positio(cid:374) a(cid:374)d (cid:396)esult of ope(cid:396)atio(cid:374)s(cid:863) Complete - free from material error - free from bias: assu(cid:373)ptio(cid:374)s: k(cid:374)o(cid:449)(cid:374) fcf + interest rate. Ideal conditions of uncertainty: assu(cid:373)ptio(cid:374)s: tates of (cid:374)atu(cid:396)e objective + publicly known + given interest rate. Income recognition: as changes in expected pv occur. Downsides of no ideal c: estimates can be wrong and hard to state= legal liabilities: greater relevance requires more estimates, but, more estimates decrease reliability. Solution: relevance and reliability must be traded off and use rra as supplement info not main. Accounting: diffe(cid:396)e(cid:374)t t(cid:396)ade-offs between, relevance and reliability, timing of revenue recognition, recognition lag, matching. Solution: the mixed measurement model: current value accounting for: a/r, fin. A/p, pensions: historical cost accounting for: invtry , ppe, goodwill. It claims that investor decisions to maximize expected utility eu.