Trial of accounting assumptions in the new economic era
Thesis keyword: accounting assumptions for the new economic era
Abstract of the paper: the knowledge economy is seen as inevitably challenging the information-based accounting industry, and accounting assumptions are inevitably affected by inferences and assumptions as to the economic environment in which accounting is based. To that end, improvements in accounting assumptions were explored and related studies were undertaken。
0 introduction
Accounting assumptions are also referred to as accounting assumptions, where reasonable judgements and estimates based on objective normal circumstances or trends are made with respect to certain unrecognized accounting phenomena, thereby forming the basis of the accounting thinking on which accounting information systems are based. On the basis of these assumptions, the scope, content and duration of the accounting can be defined and the accounting staff can determine the procedures and methods for collecting processed accounting information. Four major modern internationally recognized assumptions are accounting body assumptions, going concern assumptions, accounting phasing assumptions, and monetary measurement assumptions。
Challenges to accounting assumptions for the new economic era
The economic environment facing enterprises has changed considerably as a result of advances in science and technology: there has been an increase in trade and exchange of economic information between enterprises through networks; and within enterprises there has also been increased reliance on intranet for information communication and management. The data that accounting needs to process and the process by which they are processed are increasingly directly available in electronic form in the network, challenging traditional manual computing techniques and theoretical and methodological systems. Accounting assumptions, the cornerstone of accounting practice and theory, need to evolve in the information age economic environment。
1. 1 accounting body assumptions
The accounting entity assumptions emphasize the specific entity for which the accounting is directed, an organizational entity that has defined the specific accounting scope in space。
With the rapid development of information technology, especially the advent of network technology, business linkages have become more and more convenient, allowing multiple enterprises to form consortia, network companies and effectively deliver goods and services to markets to address market functions that individual firms cannot perform. The rapid convergence of such companies and the variety of forms of collaboration make it impossible to adapt the traditional accounting assumptions of individual, independent business entities to the new form of a temporary consortium of independent corporate enterprises on the computer network。
Information on the social costs of modern enterprises, social performance appraisals and human resources extends to the outside world of enterprises, whose productive activities are carried out not only for economic growth but also for social responsibility, with the consequent expansion of their accounting。
In recent years, there has been a wave of mergers and mergers in countries around the world, and the growing size of enterprises, coupled with the growth of transnational corporations, has allowed the spatial scope of enterprises to expand and expand indefinitely. The emergence of consolidated financial statement operations is essentially an adjustment, aggregation and consolidation of accounting information for different accounting entities, reflecting the financial position of a larger and higher-level body and, to some extent, a broadening of the former accounting body theory。
1. 2 going concern assumption
The going-concern assumption assumes that the enterprise will continue to operate in its current form and objectives over a long period of time, reflecting the aims and aspirations of the owners and operators of the business, with the aim of addressing issues such as the pricing and cost allocation of the assets of the enterprise. In the new economic era, however, that assumption also had great limitations。
Rapid advances in science and technology, changing market demand and the emergence of high-technology enterprises, but the success rate of research and development for market-appropriate products is low, and the risks of business operations are high and the threat of collapse and liquidation is self-evident. The emergence of mergers and acquisitions has challenged the static view of business continuity。
Modern network companies, virtual enterprises, as ad hoc conglomerates that exist in computer networks, can only intervene, exit and convert in a timely manner according to market needs, and are ready and random to dissolve once a transaction is completed. This challenges the relatively stable going concern assumption。
1. 3 accounting phasing assumptions
The purpose of accounting instalments is to provide timely accounting information to meet the needs of the enterprise for internal and external decision-making. The time-segregation highlighted by the accounting split is influenced by the cost of the information provided, as well as by factors such as the multilayered and diversified needs of the enterprise for accounting information。
Electronic information, the cost of which is extremely low compared to the manual accounting environment. The cost of information is inversely proportional to the number of accounting cycles, and in terms of information costs, the arrival of accounting computing has made it possible to shorten the accounting period and to improve the timeliness of information, which has provided a boon to investors and regulators。
Investors are able to keep abreast of business performance, react to investment in a timely manner and avoid reducing returns due to asymmetries in the timing of access to information. By moving from static to dynamic financial management systems, managers can at any time obtain up-to-date financial reports from the network to monitor corporate risk。
The accrual and rationing principles of the traditional accounting phased assumptions, using special procedures such as “accrual”, “deferral”, “advancement” and “amortization” to deal with payables and advances, advance and toamortized costs, including many “estimated” components, are highly arbitrary. This is an inherent flaw in the accounting phasing assumption, which will continue to be challenged in the new economic era。
1. 4 currency measurement assumptions
The currency, as a measure of accounting, is the product of a period of ... Commodity economic development. Currency measurement is only one stage in the history of accounting measurement and is itself flawed, and its limitations are increasingly evident with the advent of a new economic era。
The rapid development of network technology and the acceleration of international capital flows have made capital market transactions more dynamic, capital decisions can be completed in an instant, and exchange rate movements between real currencies have become more frequent, exacerbating the currency risks faced by accountancy entities and undermining the assumption that currency remains constant. The emergence of electronic currencies will have a significant impact on the traditional way in which some form of paper currency is used as the primary measure, and transactions between enterprises will no longer use visible and tangible banknotes and documents as agents of transactions. This phenomenon also triggered a monetary and payment revolution。
The advent of the knowledge economy, with accounting information provided solely in monetary terms, is increasingly not meeting the needs of information users. In modern e-commerce, indicators such as innovation capacity, customer satisfaction, market occupancy rates, and the speed at which virtual enterprises are created are more representative of the future profitability of an enterprise than they can be expressed in monetary terms in the statements。
Script: don't expect a certificate to put you at the top of your life. Examinations are only a means of testing knowledge, not an end in itself. Don't ever relax after the exams. Finance staff need to learn a lot, interpersonal communication, practical experience, excel, etc., and so on. If you want to look at the test correctly, you can do your job, but it's not proof, it's everything. There's one more option to have a certificate of knowledge than others. Accounting learning must seek to capture and apply relevant skills to make them more understandable and manageable. Learning should take full advantage of the relevance of knowledge and identify core elements by analysing the substance。
Accounting assumptions for the new economic era
An analysis of the challenges faced by accounting assumptions in the new economic era indicated above has made us more aware of the closeness of accounting assumptions in relation to the age environment, which, as the economic environment continues to evolve, requires constant improvement。
2. 1 improved accounting body assumptions
Today, state-of-the-art online companies in information technology break out of the original scope of accountancy because they are virtual companies with human and knowledge capital as their primary asset, thereby expanding the accountancy base into a real and virtual business. On this basis, the accounting body assumption should shift from a past emphasis on the use of information in individual absolute entities to a perspective of the relative use of information in the information age, making it an open one. Correspondingly, the accounting body assumption can be defined as an “economic benefit consortium” to adapt to changing circumstances. As long as a conglomerate coordinated for the common economic benefit, it can be regarded as a subject of accounting regardless of the number of departments or independent enterprises. This definition uses the high degree of uniformity of economic interests as a criterion for measuring and judging accounting subjects, and may define mergers, insolvencys and parent-and-son groups between “network companies” or “real” enterprises or business groups that are the “false” space subjects。
2. 2 improved going concern assumptions
Many scholars have proposed replacing the going concern assumption with the liquidation assumption, which is not the most appropriate one. There are two specific reasons for this: accounting is premised on the business's continuing normal operations, so that the enterprise can use existing assets for the intended purpose and liquidate obligations on the terms of past and present commitments; going concern is a description of the business process and is an unlimited concept of time, whereas insolvency is a description of the business's course of business at a certain point in time, implying the termination of a business's going concern. Virtual enterprises, network companies, even though they are to be dissolved at the end or midway of an enterprise's contract, were established for survival and development and not for bankruptcy。
While there are some advantages to the going concern assumption in relation to the liquidation assumption, the going concern assumption needs to be further improved in the light of the characteristics of modern forms of business organization. For enterprises with more stable production operations, the going-concern assumption could continue; for enterprises with less stable or short operating periods, the going-concern assumption could be replaced by a “project going-concern assumption”, which could be understood as: an economic interest consortium, which would remain in existence from inception to achievement of its business objectives, to facilitate the treatment of some operations and benefits, costs, etc., while avoiding adjustments such as inter-temporal amortization; and for network companies, a “temporary assumption” could be used to replace going-concern assumptions to accommodate the rapidly changing characteristics of the network。
2. 3 improvements in accounting phasing assumptions
In the new economic era, powerful computing capabilities and rapid network transmissions have overcome barriers to accounting data collection and processing. Accounting reports at each point allow the accounting period to move towards endless intervals, while reports at each point can be linked to reflect the full picture of an enterprise's business continuity process and information users can access financial accounting information online via the internet. The existence of such immediate financial accounting reports has led some scholars to recommend a trade-off assumption。
The trading period assumes that there are limitations in its own existence, and in theory, spot financial reporting seems feasible, but further analysis reveals inherent weaknesses in spot financial reporting. First, while the original accounting information can be entered online, distributed and centrally processed by computers and generated statements, there are many important original information collection, auditing and validation tasks that need to be performed by accountants. Second, under the immediate financial reporting system, all information about an enterprise, including business secrets, will be made available to the public in a way that is conducive to meeting the requirements of information users but is also exploited by competitors to the detriment of the enterprise. The regular reporting system provides only accounting results and does not reflect data processes, as opposed to the immediate financial reporting system, without such disadvantages. Thirdly, the financial accounting reports of an enterprise need to be certified by a certified accountant for the completeness, authenticity and fairness of its information. At the time of reporting, timely validation was not yet possible. Finally, the network system has its risks of insecurity。
Specific analysis of the question whether the accounting phasing assumption should be replaced by a transaction period. We know that in the age of the knowledge economy, the rapid development of science and technology has led to the emergence of virtual enterprises, with short-term project cooperation, medium- and long-term project cooperation and larger project cooperation and strategic cooperation. With short-term project cooperation, the life cycle of such enterprises is extremely short and the benefits are distributed once the transaction is completed. The virtual enterprise itself does not normally need to be accounted for, it does not need to consider going concern, let alone accounting instalments. For medium- and long-term and strategic cooperation projects, their duration often exceeds one year, sometimes even decades, and the disadvantages of using the trading period as the reporting period are obvious. Moreover, transactions with different enterprises in the industry are more inconsistent, and users of information are unable to compare the financial position and profitability of the enterprise or to properly select the target of investment. Even if the transaction periods of different projects in the same enterprise are not consistent, it is equally detrimental to managers to conduct financial management and performance evaluations。
By way of analysis, it is better to deal with the fact that the original accounting phasing assumption will continue to be retained, but that network enterprises that perform short-term project cooperation in ad hoc organizations that are dissolved upon completion of the transaction may not be phased in, and the trading period may be used as the reporting period directly; and that enterprises that implement medium- to long-term and larger project cooperation and strategic cooperation may be given an appropriate reduction in the accounting period, such as a late-stage phasing and late reporting. This overcomes both immediate reporting deficiencies and the requirement of timeliness。
2. 4 improvements in monetary measurement assumptions
Accounting measures should not be limited to currencies alone, but should be diversified. The ultimate objective of accounting is to provide a comprehensive and systematic picture of the financial position and results of an enterprise and to provide information useful for decision-making. While money can only reflect what can be measured and quantified, there are a large number of matters in modern enterprises that cannot be revealed through quantification and valuation, which can be reflected by non-monetary and qualitative rather than quantitative indicators, such as information on human resource values, knowledge capital and information values, which, if added to current financial statements, would greatly enhance the usefulness of financial reporting。
With knowledge innovation and technological advances, the growing use of electronic currencies in e-commerce, currency balances in international transactions, and the gradual acceptance of “currency changes” in the management of capital flows to enrich accounting assumptions。
3 concluding remarks
In the information age, accountancy subjects have been expanded and extended, and “economic benefit consortia” have adapted to replace “accountant subjects” to function; “project operating assumptions”, “temporary assumptions” can also compensate for “business continuity assumptions”; accounting can be made more fully functional by combining “trade period assumptions” with further subdivisions of reporting periods, while monetary and non-monetary measurements reflect improvements in “currency measurement assumptions”. As the largest developing country in the world, we need to adapt to the demands of the times, encourage accounting innovation and make accounting work better in the new era of future economic development。
Script: don't expect a certificate to put you at the top of your life. Examinations are only a means of testing knowledge, not an end in itself. Don't ever relax after the exams. Finance staff need to learn a lot, interpersonal communication, practical experience, excel, etc., and so on. If you want to look at the test correctly, you can do your job, but it's not proof, it's everything. There's one more option to have a certificate of knowledge than others. Accounting learning must seek to capture and apply relevant skills to make them more understandable and manageable. Learning should take full advantage of the relevance of knowledge and identify core elements by analysing the substance。
