Creative Accounting and Earnings Management Essay

Creative Accounting and Earnings Management - Essay Example According to the research findings it can therefore be said that financial statements are prepared by managers of a company or enterprise to represent the true and fair view of the affairs of the company. They are then used by the shareholders and other users of financial statements for the decision making process. It is a very critical part of financial accounting because it provides information for the users of financial statements to interpret and come to a conclusion about the performance of the company. Creative accounting practices are such malpractices in accounting which may be legal and in accordance with the existing accounting standards but may not be in line with the true spirits of the rules laid down under accounting standards. In other words, when financial statements are prepared by the relevant managers of a company that is inconsistent with the purpose or intention of the existing accounting standards, then it is said to be a practice of creative accounting. The man agers do so by taking advantage of the flexibilities available in the letter of the rules in accounting standards practices. Earnings management is a term which acts as a substitute for creative accounting. Trying to manipulate the earnings which are reported by the managers of a company, by taking help of some specific accounting process, is termed as earnings management. The company does so to influence its earnings in a short term horizon. Earnings management makes use of accrual accounting.... The accounting standards are revised often to help fill its loopholes. More and more regulatory measures are taken to keep a track on how the financial information is reported by the firms. These measures taken are proving quite effective in preventing current creative accounting practices, but the question is whether it will be able to stop these malpractices completely or not. It is indeed very difficult to put an end to creative accounting in future (Keupp, 2002, p.1). Key Elements of Creative Accounting It is not very easy to precisely define creative accounting. Still, three elements can be regarded as key elements of creative accounting. They are: a. Flexibility: Accounting is always associated with flexibilities present in it. While accounting, one can use their discretion to choose their own preferred way of recording sales or turnover of the company, the method of depreciation to be used by the company, the method of valuation of inventory, etc. This type of flexibility help s the managers of a company to represent the true and fair view of the company’s affairs and its earnings in the financial statements. However, in practice the case may be quite different. These flexibilities in the hands of managers can be used by them to present the company’s performance in a more favourable way than what it is in reality. These methods can be applied by staying within the regulatory framework. b. Account Management: Accounting policies can be utilized by the managers of a company to accomplish the objectives of the management of the company and may not fulfil the essential requirements of the users. It can thus be used as a tool that can be managed and not as a means to

Building Standard Oil Company Research Paper Example | Topics and Well Written Essays - 1250 words

Building Standard Oil Company - Research Paper Example Rockefeller paid attention to every aspect of his business, checking every detail to cut his costs, to make his product better, and to add new products. Sometimes he worked with the manual laborers to understand his business better and greatly influenced his partners and managers to follow his example. Dominick Armetano described that his business: â€Å"prospered quickly in the intensely competitive industry due to the economic excellence of its entire operations. Instead of buying oil from jobbers, they made the jobbers' profit by sending their own purchasing men into the oil region. They also made their own sulfuric acid, barrels, lumber, wagons, and glue. They kept minute and accurate records of every item from rivets to barrel bungs. They built elaborate storage facilities near their refineries. Rockefeller bargained as shrewdly for crude as anyone has before or since; and Sam Andrews coaxed more kerosene from a barrel of crude than the competition could. In addition, the Rocke feller firm put out the cleanest burning kerosene and managed to profitably dispose of most of the residues, in the form of lubricating oil, paraffin wax, and Vaseline.† (Armetano, 1982) In his quest to make better products Rockefeller started in-house preparation of important inputs into the production process now recognized as â€Å"vertical integration†. ... Turning waste into a product to resell increases income and lowers the costs. Rockefeller made the oil-refining industry much more efficient, so he was able to purchase many of poorly managed refineries yet his competition like Sun Oil in the USA still existed while international competitors were even larger. Even his most hostile critics like Ida Tarbell (whose brother was in management of competing company, Pure Oil Company) recognized this efficiency: â€Å"Not far away from the canning works, on Newtown Creek, is an oil refinery. This oil runs to the canning works, and, as the newmade cans come down by a chute from the works above, where they have just been finished, they are filled, twelve at a time, with the oil made a few miles away. The filling apparatus is admirable As the newmade cans come down the chute they are distributed, twelve in a row, along one side of a turn-table. The turn-table is revolved, and the cans come directly under twelve measures, each holding five gall ons of oil — a turn of a valve, and the cans are full. The table is turned a quarter, and while twelve more cans are filled and twelve fresh ones are distributed, four men with soldering cappers put the caps on the first set†¦. The cans are placed at once in wooden boxes standing ready, and, after a twenty-four-hour wait for discovering leaks are nailed up and carted to a nearby door. This door opens on the river, and there at anchor by the side of the factory is a vessel chartered for South America or China †¦ waiting to receive the cans†¦. It is a marvelous example of economy, not only in materials, but in time and footsteps (Tarbell, 1972) Making good quality products efficiently and selling

Types of Elasticity of Demand and Its Importance Essay

Types of Elasticity of Demand and Its Importance - Essay Example There are some factors which effect the elasticity of supply one of which is the ease availability of resources (Boyes et al, 2008). Cross Elasticity of Demand (XED) measures the responsiveness of quantity demanded of Good A with reference to price changes in Good B. Cross Elasticity is used to measure the degree of substitution between the two products i.e., how close the two goods are substitutes to each other. Again, if the Cross Elasticity Demand of Good A and B is elastic or of a greater value, the products would be close substitutes. A small change in the price of Good B would bring about greater changes in the demand for Good A and vice versa (Mushin, 2000). The formula for Calculating XED is: XED= % Change in Quantity Demanded of Good A (Boyes et al, 2008). % Change in Price of Good B XED= % Change in Quantity Demanded of Good A (Boyes et al, 2008). % Change in Price of Good B = [(1750 – 1500)/1500] * 100 [(?11 - ?10)/10] * 100 =16.6% 10% = 0.6 If Sunsilk and Pantene a re taken into consideration, if the Price of Pantene changes by 10%, the demand for Sunsilk would change by more than 10%. This would give a comparatively higher value of XED and hence it can be deduced that Sunsilk and Pantene are close substitutes (Boyes et al, 2008; Mushin, 2000). Income Elasticity of demand is used to measure the nature of the product. If the demand of a product falls when people ‘s income rise, the product would be called an inferior good. In contrast, if the demand of a product rises with people’s income, the product would be called a normal good and vice versa, if the demand of a product falls when people’s income decrease, the product would be called a superior good (Boyes et al, 2008). The formula to calculate this is as follows: YED... Types of Elasticity of Demand and Its Importance The method of calculation is the same as other elasticity of demand. Only the Price section has to be replaced with changes income, which would be [(New income – the Old income)/Old income] * 100. In order to maximize the revenues, firms must have the knowledge about the Income and Price Elasticity of their product. This is because when would plan to raise or reduce their prices to leverage their revenues, this might not prove to be fruitful it unless it is done strategically. If the demand for a product is price elastic, a rise in price would drive the consumers away as the demand would be more responsive to price changes and the consumers are bound to switch to cheaper substitutes. Secondly, if the prices are decreased and if the demand is price inelastic, the firm’s revenue would fall as there would be little reaction from the consumers. If high prices are set for price elastic goods, and low prices are set for price inelastic goods, the revenues would fall. Therefore firms need to know the products’ price elasticity so that it can accurately price its products in order to maximize its revenues. On the other hand, pricing strategies have to be set in accordance with the product’s Income elasticity of demand. If a rise in mass market’s income leads to a fall in demand, the product would have to be repositioned as a superior good pertaining to the profitability and would have to high priced for revenues to rise.

Reflection paper Essay Example | Topics and Well Written Essays - 500 words - 37

Reflection paper - Essay Example It is important for me to know who I am and to acknowledge my identity. It also helps me to determine my strengths and weaknesses. This was the most interesting yet most difficult lesson to let sink in. Though I know that self-concept is an essential part of life, it is hard to look at your own strengths and weaknesses. I know now what some of those are and the areas that are my weaknesses are those that I can work on and learn from. It is not as simple as looking at yourself in the mirror but more like looking at yourself under a microscope and sometimes what you see is difficult. That is also where I had several â€Å"aha† moments. It sounds narcissistic to only acknowledge what I learned about myself but it is difficult to build on anything else in communication without acknowledging my own strengths and weaknesses in life. The HURIER method was also a great thing to learn because it helped me learn more about listening. Sometimes I find myself busy and thinking about other things that I have to do that I sometimes may drift off and think about other things when I am in the middle of a conversation or even in class. I may be hearing someone else but I am not listening. This lesson helped me to realize I need to stop what I am doing and listen or the translation of what I hear can be completely different than the message I was supposed to be hearing. I know that I need to go through the steps of hearing, understanding, remembering, interpreting, evaluating and responding, hence the acronym. In any conversation or giving an answer in class, I have to actually hear and process the message in order to give an appropriate response to what it is I have heard. I think it is a tool that I use without thinking about it but actually seeing it in a logical organizational form makes it easier to remind myself that I need to really think things through before responding. The elements that make me a bad

Plantain Vs Banana Essay Example | Topics and Well Written Essays - 500 words

Plantain Vs Banana - Essay Example The name Musa paradisiaca was given to the plantain group which are cooked and consumed while still starchy† (Robinson 21). Through further classification the two fruits became known scientifically as M. balbisiana and M. acuminata (Robinson 1). Bananas and plantains share the same source of origin in Southeast Asia (Robinson 1). Today, the banana and plantain are abundant in slightly different parts of the world. Historically, the banana traveled from its origin to more tropical climates around 500 A.D, then ended in the Caribbean and South America about a thousand years later (Robinson 14). Most modern bananas are grown in the Caribbean region. In contrast, the plantain traveled from its origin of Southeast Asia and is now produced primarily in South America. Physically, bananas and plantains appear similar except for their color. Bananas are typically yellow when ripe and green when not ripe. Plantains are green when not ripe and black when ripe. A plantain is longer than a banana, and has a thicker skin (Chiquita Bananas). The major differences between plantains and bananas are their taste differences and their popular uses. Although they appear similar on the outside, inside they are quite different and are used for different purposes. According to the Chiquita banana website, bananas are much sweeter than plantains and are typically eaten raw (Chiquita Bananas). Bananas are considered a fruit while plantains are considered members of the vegetable family. Plantains can be eaten raw, but are mostly eaten when they have been steamed, baked, boiled, or fried. Plantains are used as though they are a vegetable and are a staple in Central American and South American diets. Interestingly, plantains are produced primarily in South America and consumed locally. â€Å"Only 1.62% of the world plantain production is exported† (Robinson 6). Bananas became popular in the United States after they started being imported

Collaborative Strategies Essay Example | Topics and Well Written Essays - 750 words

Collaborative Strategies - Essay Example This also makes both the regions to have something to associate each other with, like a company having a head office in another place and operations in another place, makes people of the other country feel about the company more special, and thus it increases market share. It also gives an extra control to an origin or parent company over the collaborated company and its origin, also it plays some role in having better relations between not only two companies but also two countries and thus governments are involved in a positive manner. The collaborative arrangements abroad are to reduce overheads and costs, as initiating the operations on the personal expenses can bring a heavy investment and capital into action, which is also not secured, as no body knows what might be the preferences of the origin where the initiation would take place. The real problem that arises when the collaboration takes places between a local and international arrangement is that at times, the international arrangement becomes more prominent and beneficial where as the local starts suffering as there might be a possibility that due to high cultural values the firm makes fair reputation abroad while having similar or even poorer reputation in the origin, this can really affect the operations and can increase the worries of the decision makers. One of the widely most methods used for collaboration between two different companies or even parties is licensing, which after having more specialized form, known as franchising, however there are few differences between the two but they have more similarities as they both are used as a major form of collaboration. In licensing, the problem that occurs is on the side of the origin company, as if it would issue license to some other party than the party can start providing the service or products under the parent company's name, with having no concerns on following the instructions of parent company, they can also set the entire fixture and related things according to their own will, this can cause the parent company to have a poor image at times if the licenser has not taken any care of the original standards followed by the parent company. In franchising, the problem gets opposite, as now the franchisee has to follow the instructions of the parent company in a strict manner, even t he fixtures and the materials used in the product are same all around the globe in accordance to the parent company's will, in this case the franchisee gets worried as failure to maintain the real standards can lead to the cancellation of the franchise agreement. As long as we talk about business, than it automatically takes us to talk about individual objectives, which lead to problems. There are numerous problems occurring in the collaborative arrangements such as having more concerns on the partnership rather than private operations, controlling problem as both of the parties have merely some control on each others work which can result in change views, also the personal objectives come first which can make both the parties apart and also cultural differences can occur, which are a major issue as there have been various firms

The Cruise Ship Industry Effects Essay Example for Free

The Cruise Ship Industry Effects Essay 1. (a) Critically evaluate the impacts that the cruise ship industry has on destinations. (b) Suggest recommendations that can be used to minimize or mitigate the problems Identified in question 2a. 1. Critically evaluate the impacts that the cruise ship industry has on destinations. The Caribbean represents the main market for the cruise industry. As a major destination, the Caribbean cruised has been activated since early 1980, and has identified itself with the cruising industry over the years. While there are clearly benefits to be gained from cruise ship visits, there are also issues which destinations must consider, in order to optimize benefits and reduce negative impact, ( Manning, 2006). The main challenges encountered by activating the cruise ship industry in the Caribbean are as followed: environment challenges, maintaining market share and growth patterns, the concentration of the cruising industry, the increase in ships capacity, congestion, natural disasters, diversification of the product offered and competition with hotels, (Dridea et al, n.d). Environmental Impacts The environmental impacts of the cruise industry may be positive or negative. This industry may encourage an appreciation of the environment, and generate support and funds for environmental protection, but it can also degrade the marine and adjacent terrestrial environment. The environmental costs of the sector are incalculable given that the cruise ship industry is unregulated and difficult to gauge widely its impacts, despite enforcing environmental standards for the industry. For example, the introduction of the cruise shipping Port Facilities in Falmouth has posed negative impact on the environment. Mott Macdonald (2007) postulates that the major impacts expected from the development of the Port Facilities in Falmouth includes: loss of habitat and biodiversity such negative impacts are a major concern to Jamaican coastal areas where the reefs are already stressed from a number of anthropogenic and natural threats, loss of fish habitat widening of the entrance of the channel will partially remove the reef wall which is a primary habitat to Bermuda Chub .The potential exists for disruption to fish habitat, spawning and feeding grounds and possibly fish migratory routes. This represents a direct long-term adverse impact to the fish community on the reef and in the harbour. Other environmental impact includes: †¢ Loss of Coral Cover †¢ Ecological Impacts ( its associated flora and fauna) †¢ Increased fresh water runoff due to expansion of paved area †¢ Increased potential for oil spills Economic Impact The cruise industry has the potential to provide economic benefits to a port state. These economic benefits arise from five principal sources: 1) spending by cruise passengers and crew; 2) the shore side staffing by the cruise lines for their headquarters, marketing and tour operations 3) expenditures by the cruise lines for goods and services necessary for cruise operations; 4) spending by the cruise lines for port services; and 5) expenditures by cruise lines for the maintenance. The cruise industry has provided the highest economic contribution for the United State Virgin Island, according to the survey conducted by the U.S.-based organization Business Research and Economic Advisors (BREA) during the period of 2005-2006 cruise year , it was concluded that the total cruise tourism expenditures in U.S. Virgin Islands summed up to $362 million. St. Maarten had the second highest per passenger spending rate and the highest expenditure rate, resulting in $246 million in cruise tourism expenditures. However, over emphasis on the economic benefits derived from tourism has often led to adverse physical and social consequences. The reason for this is the simple fact that, as tourism development and tourist activity expands, so too does the potential harm, social impact and potential for human induced harm and disturbance to destination residents and the environment (Jackson 2006). Kenneth (2003), also concur with Jackson that even though the cruise sector has opened up an opportunity for heavy use and instantaneous cash flow from short term but intense use, this had added pressure onto land-based facilities, resulting in congestion, scheduling and control problems, which have affected visitor satisfaction which will result in decline cruise visitors. Other experts in the field agreed with the statements mention above that as the cruise ships continue to grow larger, further investment may be required. Under these types of tourism scenarios with high infrastructure or environmental costs, rapid growth of tourism may result in a stagnation of or even a decline in GDP (Gooroochurn et al (2005); Nowak et al (2003) and Nowak et al (2007). Social impacts Interactions between resident and cruise passengers can have positive effects offering residents the possibility of learning about the world and explore new life perspectives. The largest social issue for a destination is people pollution; increasing cruise activities restrict the space of residents and sometimes push them to adopt different moral conducts. Suggest recommendations that can be used to minimize or mitigate the problems Identified in question 2a. In order for a destination to minimize or mitigate the problems associated with the cruise industry they need to follow in the ‘footsteps’ of the Eastern Canadian, with the introduction of cruise ships into that environmentally sensitive areas of the Eastern Canadian Arctic raises many concerns. However, the World Wide Fund for Nature (WWF) introduced a set of principles, when implemented, could help in the protection of the Arctic and its environment from negative effects caused by tourism. I concur with Kenneth Atherley (2003), that in order to minimize the added pressure onto land-based facilities, resulting in congestion, scheduling and control problems, which have affected visitor satisfaction. Countries need to implement the strategy of Bermuda which placed a cap on cruise tourism, this strategy outline that not more than two (2) ships should be at the Port at one time, and each passenger have to pay $60 head tax, ships operating in their water must employ Caribbean nationals, pay US$1.5 million towards an education fund; each passenger must have a US$30 voucher at the ship’s expense. Additionally, another way to solve the problems associated with the cruise industry in the Caribbean region lies with the tourism policymakers; they need to work collaboratively with all stakeholders, with the ultimate goal of maximizing the benefits derived from tourism, while at the same time minimizing costs/negative impacts. They can also implement carrying capacity strategies which aimed at maintaining the balance between social and ecological monitoring programs. Other strategies to mitigate the negative impact caused by the cruise industry is to monitor and evaluate the impact of cruise tourism on the natural, social and cultural environment in order to ensure the conservation of the resource base; continuously assess the carrying capacity of the existing attractions and services used by the cruise visitor, and develop mechanisms for the management of these sites on a sustainable basis. Encourage the enhancement of existing attractions and facilities and the development of new ones; establish and manage strong relationships with the cruise industry to ensure mutually beneficial outcomes; develop appropriate programmers which effectively convert cruise passengers to long stay visitors. References Dridea R. and Mihai., B (n.d). The Impact of the Cruising Industry on Local Destination Retrieved from http://www.scribd.com/doc/13728721/ Gooroochurn N. and Blake A., (2005). Tourism Immiserization: Fact or Fiction? Feem Working Paper No. 143.05. Fondazione Eni Enrico Matei. Jackson, L. A. (2006). Ameliorating the negative impacts of tourism: a Caribbean perspective. International Journal of Contemporary Hospitality Management, 18 (7), 574-582. Retrieved from Emerald Database. Kenneth A. (2003). Cruise Industry–Related Challenges Facing Caribbean Destinations. Retrieved from http://www.linkbc.ca/torc/downs1/CaribbeanCruiseIndustry.pdf Manning T,( 2006), Managing Cruise Ship Impacts: Guidelines for Current and Potential Destination Communities. Retrievied from http://www.tourisk.org/content/projects/Managing%20Cruise%20Ship%20Impacts.pdf Nowak J.J., Sahli, M. And Sgo, P. (2003). Tourism, trade and domestic welfare, Pacific Economic Review, 8 (3), pp. 245-258. Nowak J.J.,. and Sahli, M., (2007). Coastal tourism and â€Å"Dutch diseases† in a small island economy, Tourism Economics, 13 (1), pp. 49-65.