A comparative study of conventional and modern system of accounting
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a comparative study of conventional and modern system of accounting wikipedia
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A comparative study of conventional and modern system of accounting
17-03-2017, 10:54 AM
The development of the modern accounting system and accounting theories is accompanied by substantial changes in economic relations and in society in general which naturally result in the need to implement changes in accounting systems and adapt them to the new challenges and the current situation In trade relations. At the same time, it must be said that innovations are applied relatively slowly in accounting compared to other fields of the economy. However, nowadays it is obvious that changes are inevitable and, in such a situation, it is very natural that specialists like Henderson estimate that accounting is not just a passive scoring process, the results of which are announced, forgotten.
Indeed, such an approach is the hallmark of traditional accounting systems and theories because accounting traditionally is considered a very conservative field and, as a rule, specialists prefer to implement traditional approaches to accounting. In this respect, it should be said that one of the most widely held accounting theories, which is based on traditional and conservative approaches to accounting, is normative accounting. Basically, regulatory accounting involves pure maintenance score with data analysis and development of optimal accounting standards to improve the performance of a company.
When analyzing nominative accounting, it should be said that this approach can hardly be named effective, especially at present, since it does not really address current trends, analyzing the prospects of a company in the context of industry development in particular. On the other hand, nominative accounting is very conservative and is based on the principles of traditional counting. However, it does not necessarily mean that this approach is absolutely unacceptable because it is a bit outdated. In fact, this system can be quite reliable and provide positive results, but such an approach does not fully reflect current economic trends and does not match the new demands these trends impose on accounting. This means that the accounting system must now be more flexible and open to changes and implementation of innovations that could potentially expand the capacities and functionality of the accounting system away from traditional accounting and involve new areas in which accounting Has never played a significant role in the past.
In this regard, it is possible to refer to positive accounting as a new, more contemporary and more advanced approach to accounting. It must be said that this approach is quite different and even contrasts with normative accounting. In fact, this approach attempts to overcome the conventional boundaries of accounting and to seek more in the future of accounting practices. Unlike normative accounting, positive accounting tends to predict the future development of accounting and business in general that makes this approach very useful for the company because it increases the predictive potential of the analytical unit of the company.
Basically, positive accounting is associated with the contractual vision of organizations. In such context, an organization is seen as a nexus of contracts and accounting a tool to facilitate the formation and execution of contracts. Under this approach, accounting practices evolve to mitigate hiring costs by establishing an agreement between the different parties. It is noteworthy that positive accounting postulates that conservatism in accounting, that is, in the conventionally defined sense as requiring lower or higher standards of verification to recognize losses or gains, originates in contractual markets, including compensation contracts Management and lender debt contracts. For example, absenteeism, management compensation agreements can reward managers based on current reports that later indicate that the evidence was not justified.
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