Discussions Assignment Example | Topics and Well Written Essays - 1000 words

Discussions - Assignment ExampleThe Enron fraud was revealed to the public in October 2001 and this ended up in the bankruptcy of the organization. While analyzing the Enron accounting impropriety, it appears that the confederacy executives exploited accounting limitations with intend to create a false view of the cash flows and to prepare a delusory balance sheet. This inflated the profits. Fair accounting practices and proper annual reporting might have prevented the Enron scandal. Effect of Accounting Impropriety Although improper or dirty accounting practices whitethorn assist a firm to gain short term fiscal benefits, such practices can have dreadful consequences on the company in the long term. Undoubtedly, accounting malpractices will reduce stakeholder confidence in management and hence investors would be reluctant to invest in the company. This situation may adversely affect the firms overall financial performance. Management professionals opine that active stakeholder engagement in business is inevitable to improve financial performance. Hence, in order to minimize the resulting impact of accounting impropriety on the business, making timely changes to the top management team and to publish proper annual reports is essential. ... Hence, it can be stated that bookkeeping constitutes the basic part or starting point of the accounting process. As Banerjee (2010) states, the scope of bookkeeping is restricted to systematic and repetitive recording of business transactions in ledger accounts through journal. In contrast, the accounting process involves the preparation of Trial Balance, Profit & Loss A/c, Income Statement, and Balance Sheet using accepted accounting principles. While bookkeeping is only a clerical job, accounting is an analytical job (p.4). Accounting equating Accounting equation also referred to as balance sheet equation, reflects the relationship between assets, liabilities, and owners equity of a business. This equation is linked t o the pattern that total debits equal total credits. The accounting equation can be expressed as Assets = Liabilities + Capital. As accounting equation is fundamental to the double compliance bookkeeping system, it can greatly support the work of professional accountants. More precisely, this equation is the basic idea behind the preparation of balance sheet. A sizable understanding of this equation can assist stakeholders, particularly investors to form potential business decisions. While making business decisions, it is important to give specific focalize to liabilities rather than assets. Discussion 3 SOX and Accounting Professionals The Sarbanes-Oxley Act (SOX) has been recently introduced in the United States to promote fair reporting of asset valuation. The SOX framework necessitates proper financial accounting disclosure and therefore organizations are required to produce complete information of assets, depreciation, values, and status in any accounting period (Omnix Asse t Management,