Mautz (1973) made the following comment: “Accounting is what it is today not so much because...

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Accounting

Mautz (1973) made the following comment: “Accounting is what itis today not so much because of the desire of accountants butbecause of the influence of businessmen. If those who makemanagement an investment decisions had not found financial reportsbased on historical cost useful over the years, changes inaccounting would long since have been made” Critically evaluatethis statement. In your discussion, you should consider therelative merits of historical cost accounting as well as thevarious alternative measurement systems that have beenproposed.

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Accounting is the language of business which provides the information on financial status and performance of the entity to the users of financial statements Over the years accountants have adopted a variety of methods in the preparation of financial statements The Historical cost also known as C onventional accounting holds that the elements of financial statements be reported based on their initial cost of acquisitionThe historical cost accounting is based on the realisation principle which requires that only realised revenues be included in the income statement In the balance sheet the realisation principle requires adherence to the historical cost of the asset untill the asset is sold despite changes in See Answer

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Mautz (1973) made the following comment: “Accounting is what itis today not so much because of the desire of accountants butbecause of the influence of businessmen. If those who makemanagement an investment decisions had not found financial reportsbased on historical cost useful over the years, changes inaccounting would long since have been made” Critically evaluatethis statement. In your discussion, you should consider therelative merits of historical cost accounting as well as thevarious alternative measurement systems that have beenproposed.