Questions and answers about the accounting part 2
Efficient Market Hypothesis (EMH) explains that there is a relationship between the price of the securities to the information available, the EMH states that security prices reflect available information.
Levels of market efficiency:
Weak: The price of securities reflect the past.
Semi Strong: The price of securities reflects publicy information (the information published at this time, such as financial statements).
Strong: The price of securities reflect the past, present information and private information (information not yet published).
6.) Development of accounting theory can be classified into traditional accounting theory and positive accounting theory. Explain the arguments that support!
Traditional accounting theory:
Several approaches to formulating an accounting theory known as the traditional approach, because these approaches are characterized by the absence of the verification process seriously in an attempt to develop a theory of accounting. Traditional approaches is more conventional than the flow of new research in research that relies on the traditional reasoning in formulating the conceptual framework of accounting. At the beginning of the author only describes practices that have been observed, and by presenting the rules for classifying pedagogical practices tersebut.Kemudian after the U.S. Securities Acts 1933 and 1934 set the disclosure, accounting theorists developed a normative theory. At that time, the empirical validity of the hypothesis as a normative theory of reliance do not get attention.
Positive accounting theory:
Bertawal positive accounting theory from research conducted by Watts and Zimmerman. Watts and Zimmerman did not use normative theory, but the theory of positive arguments explaining how the real world works. Positive accounting theory can be used to explain and predict phenomena. This theory will not substantiated, it will be tested whether predictions can be rejected by the empirical evidence. The theory consists of assumptions and hypotheses sehimpunan substantive. Outline positivist methodology: theory development begins with an explanation of the phenomenon considered by researchers. In addition there should be no assumption either declared or not. Having studied the relationship antarfenomena with certain assumptions, derived hypothesis, and then collected the required data. Subsequent procedures, to test the hypothesis. If proven to be wrong, there was the theory. Theory will always change and evolve if there was an attempt by the researcher (another) to develop the methodology of previous investigators.
8.) Explain the purpose of financial reporting by business enterprises!
The purpose of financial reporting by business enterprises are:
Provide information to assist investors and creditors present and potential as well as other users in assessing the amounts, timing and uncertainty of cash inflows outlook on the company.
Provide information about the economic resources of the company.
Provides information about the company's financial performance during a period.
Provides information on how to obtain and use the company's cash, loans and payments on the loan.
Provide information on how the company's management has done a job tanggungjawagnya the owner.
Provide useful information to managers and directors in making decisions according to kepentungan owners.
9.) Statement of Financial Accounting Concept N0. 2: Qualitative characteristics of accounting information contained concept of relevance (relevant) and reliable (reliably), explain you think! Explain cost-benefit considerations do you think?
Relevance is the information must be related to or useful in connection with actions designed to facilitate or produce information to generate. It requires communication of information or actions that have an influence. So the information relevant to the ability to influence the manager's decision to change or confirm their results or consequences of an action or decision.
Reliable refers to "the quality of the data depends Padnya memmungkinkan use with complete confidence that the presentation of what was supposed to be served". Reliability will vary between users, depending on the user's knowledge about the rules for setting up information.
Cost-benefit considerations are recognized as pervasive. Financial accounting information will be sought if the benefits derived from such information exceed the costs.
10.) What is the importance of information asymmetry, adverse selection and moral hazard?
Information asymmetry is a party to a business transaction has the advantage to access or obtain information than the other party. The importance of information asymmetry is that there is a balance in obtaining financial problems between the management company (manager as internal party firm) and outsiders (investors, shareholders).
Adverse selection appears that some people, such as company managers and insider, know more about the present and future prospects of the company rather than outside investors. There are various ways in which managers and insider can exploit the benefits of the use of their information by outsiders. As an example of the bias or manipulation of information provided to investors. The importance of adverse selection here is that the management company with full disclosure of the information is relevant, reliable, timely and effectively to minimize habituation manipulation or financial information that is useful for investors in making decisions.
Moral hazard arises because of the separation of ownership and control of the asymmetry of information, does not seem to arise from business managers to run the company. Manager's decision problem is to decide how much effort to run the company as required by the shareholders. Net income is usually used to measure the performance of these managers, in addition to long-term debt and debt contracts are also used. The importance of moral hazard is the investor can control the performance of the managers who run the company's business, so that managers are more effective and efficient in work. The performance can be seen from the manager: net income can be presented as sautu input into executive compensation contracts for managers motivate performance, net earnings can show the performance of capital markets and managerial labor markets, so the lazy manager will receive a reduction in revenue, reputation and value with the passage of time .
13.) Disclosure of accounting information disclosure can be grouped into compulsory (mandatory) and voluntary (voluntary). Explain your opinion!
Disclosure of information required (mandatory) is reporting or accounting information to be presented by a business entity in accordance with the rules in the Statement of Financial Accounting Standards (in Indonesia in accordance with PSKA) in the form of financial laopran:
Balance Sheet.
The income statement.
Statements of cash flows.
Owner's equity statement.
Notes to the consolidated keuagan.
Voluntary information disclosure (voluntary) is a report that must be reported by the business entity due in IFRSs are not required but voluntarily reported by such entities. An example is a report on the environment especially for industries where environmental factors play an important role gabi business entity; report value added (value added statement); report CSR (Corporate Social Responsibility).
14.) Explain the following terms:
a. Trueblood Committee. c. Timeliness
b. Representational faithfulness. d. Fully reflect and react Quickly
a. Trueblood Committee is drafting team to develop financial reporting purposes are to determine:
Who needs the financial statements.
What information they need.
How much information needs to be provided through accounting.
What frameworks are needed to provide the information requirements.
b. Representational faithfulness is the figures and explanations in the financial statements represent what actually exists and happens. Namely, figures and explanations of accounting in accordance with the resources or events that claimed by the figures and explanation. So the information should be free from bias.
c. Timeliness is the accounting information must be available to decision makers before the information is lost its capacity to influence decisions.
d. Quickly react fully reflect and are reflected in security prices fully and quickly react to changes that occur in the stock market or securities market.
Efficient Market Hypothesis (EMH) explains that there is a relationship between the price of the securities to the information available, the EMH states that security prices reflect available information.
Levels of market efficiency:
Weak: The price of securities reflect the past.
Semi Strong: The price of securities reflects publicy information (the information published at this time, such as financial statements).
Strong: The price of securities reflect the past, present information and private information (information not yet published).
6.) Development of accounting theory can be classified into traditional accounting theory and positive accounting theory. Explain the arguments that support!
Traditional accounting theory:
Several approaches to formulating an accounting theory known as the traditional approach, because these approaches are characterized by the absence of the verification process seriously in an attempt to develop a theory of accounting. Traditional approaches is more conventional than the flow of new research in research that relies on the traditional reasoning in formulating the conceptual framework of accounting. At the beginning of the author only describes practices that have been observed, and by presenting the rules for classifying pedagogical practices tersebut.Kemudian after the U.S. Securities Acts 1933 and 1934 set the disclosure, accounting theorists developed a normative theory. At that time, the empirical validity of the hypothesis as a normative theory of reliance do not get attention.
Positive accounting theory:
Bertawal positive accounting theory from research conducted by Watts and Zimmerman. Watts and Zimmerman did not use normative theory, but the theory of positive arguments explaining how the real world works. Positive accounting theory can be used to explain and predict phenomena. This theory will not substantiated, it will be tested whether predictions can be rejected by the empirical evidence. The theory consists of assumptions and hypotheses sehimpunan substantive. Outline positivist methodology: theory development begins with an explanation of the phenomenon considered by researchers. In addition there should be no assumption either declared or not. Having studied the relationship antarfenomena with certain assumptions, derived hypothesis, and then collected the required data. Subsequent procedures, to test the hypothesis. If proven to be wrong, there was the theory. Theory will always change and evolve if there was an attempt by the researcher (another) to develop the methodology of previous investigators.
8.) Explain the purpose of financial reporting by business enterprises!
The purpose of financial reporting by business enterprises are:
Provide information to assist investors and creditors present and potential as well as other users in assessing the amounts, timing and uncertainty of cash inflows outlook on the company.
Provide information about the economic resources of the company.
Provides information about the company's financial performance during a period.
Provides information on how to obtain and use the company's cash, loans and payments on the loan.
Provide information on how the company's management has done a job tanggungjawagnya the owner.
Provide useful information to managers and directors in making decisions according to kepentungan owners.
9.) Statement of Financial Accounting Concept N0. 2: Qualitative characteristics of accounting information contained concept of relevance (relevant) and reliable (reliably), explain you think! Explain cost-benefit considerations do you think?
Relevance is the information must be related to or useful in connection with actions designed to facilitate or produce information to generate. It requires communication of information or actions that have an influence. So the information relevant to the ability to influence the manager's decision to change or confirm their results or consequences of an action or decision.
Reliable refers to "the quality of the data depends Padnya memmungkinkan use with complete confidence that the presentation of what was supposed to be served". Reliability will vary between users, depending on the user's knowledge about the rules for setting up information.
Cost-benefit considerations are recognized as pervasive. Financial accounting information will be sought if the benefits derived from such information exceed the costs.
10.) What is the importance of information asymmetry, adverse selection and moral hazard?
Information asymmetry is a party to a business transaction has the advantage to access or obtain information than the other party. The importance of information asymmetry is that there is a balance in obtaining financial problems between the management company (manager as internal party firm) and outsiders (investors, shareholders).
Adverse selection appears that some people, such as company managers and insider, know more about the present and future prospects of the company rather than outside investors. There are various ways in which managers and insider can exploit the benefits of the use of their information by outsiders. As an example of the bias or manipulation of information provided to investors. The importance of adverse selection here is that the management company with full disclosure of the information is relevant, reliable, timely and effectively to minimize habituation manipulation or financial information that is useful for investors in making decisions.
Moral hazard arises because of the separation of ownership and control of the asymmetry of information, does not seem to arise from business managers to run the company. Manager's decision problem is to decide how much effort to run the company as required by the shareholders. Net income is usually used to measure the performance of these managers, in addition to long-term debt and debt contracts are also used. The importance of moral hazard is the investor can control the performance of the managers who run the company's business, so that managers are more effective and efficient in work. The performance can be seen from the manager: net income can be presented as sautu input into executive compensation contracts for managers motivate performance, net earnings can show the performance of capital markets and managerial labor markets, so the lazy manager will receive a reduction in revenue, reputation and value with the passage of time .
13.) Disclosure of accounting information disclosure can be grouped into compulsory (mandatory) and voluntary (voluntary). Explain your opinion!
Disclosure of information required (mandatory) is reporting or accounting information to be presented by a business entity in accordance with the rules in the Statement of Financial Accounting Standards (in Indonesia in accordance with PSKA) in the form of financial laopran:
Balance Sheet.
The income statement.
Statements of cash flows.
Owner's equity statement.
Notes to the consolidated keuagan.
Voluntary information disclosure (voluntary) is a report that must be reported by the business entity due in IFRSs are not required but voluntarily reported by such entities. An example is a report on the environment especially for industries where environmental factors play an important role gabi business entity; report value added (value added statement); report CSR (Corporate Social Responsibility).
14.) Explain the following terms:
a. Trueblood Committee. c. Timeliness
b. Representational faithfulness. d. Fully reflect and react Quickly
a. Trueblood Committee is drafting team to develop financial reporting purposes are to determine:
Who needs the financial statements.
What information they need.
How much information needs to be provided through accounting.
What frameworks are needed to provide the information requirements.
b. Representational faithfulness is the figures and explanations in the financial statements represent what actually exists and happens. Namely, figures and explanations of accounting in accordance with the resources or events that claimed by the figures and explanation. So the information should be free from bias.
c. Timeliness is the accounting information must be available to decision makers before the information is lost its capacity to influence decisions.
d. Quickly react fully reflect and are reflected in security prices fully and quickly react to changes that occur in the stock market or securities market.
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