This course is an introduction to the basic concepts and standards underlying financial accounting systems. Two contributors to the development of accounting theory, through the use of imagery have been David Solomon and Tony Tinker. Solomon was a strong advocate of neutrality in accounting and used images of journalist, speedometer, telephone and cartography to illustrate his way of thinking (Tinker, 1991, p297). Solomon further suggests accounting should function like cartography in producing maps of economic reality. These images give us greater insight into how accounting should function in an ideal world. As demonstrated by Solomon and Tinker no one image captures fully what accounting is all about.
However the technological and globalization induced changes that have occurred have resulted in loopholes in accounting being exploited. Much interest in developing a theoretical knowledge base for accounting has gathered pace. The conceptual framework has been an important milestone that provides accountants with basic tools needed to understand and apply different accounting policies in appropriate circumstances. Accounting theorists have also provided useful insights into accounting through the use of images.
In addition the transition from SSAP2 to FRS18 has lead to clarification on accounting polices and estimation techniques, however inconsistencies and subjectivity still remains. However the Tinker and Solomon debate represents in its self a loophole in accounting, as there is a lack of agreement of what function it should play and how accounting practices should be employed. Overall in my opinion the accounting profession has made significant progress in developing a theoretical base for accounting.
Also due to the function of accounting being dependent on the needs of users and there needs being responsive to constant changes in society and economic activity, the accounting theoretical jigsaw is never likely to be complete as when one problem is resolved another appears. Accounting is everything in the world especially in daily life based on our activities,bussines,education studies.
Also the need for an independent auditor to verify weather accounting information gives a true and fair view partly demonstrates the subjective nature of the profession and the presence of loopholes. Briefly speaking, financial accounting is the process of collecting, summarizing and reporting financial information of an entity according to established standards and principles. Chart of accounts: A list of all accounts set up to handle a company’s accounting transactions.