8 Examiners like to see answers where students realise that all accounting is not found in textbooks, but exists for the use of businesses. Get them to use examples in essay questions based on what they have observed in the businesses around them. For example, a question on ratios and interpretation will often be answered by students just using figures. They should also say why the figures have changed; what possible causes there might have been. In their life outside their studies, they should observe how accounting is carried out. They all go at one time or another to refectories, restaurants, shops, department stores, clothes shops, travel on buses and trains, etc. They should observe how the money is calculated and collected, what sort of bills or tickets are given out, how fraud or errors could occur, and so on. They can give this flavour of the real world in their answers. Believe us, they will get better marks.
The problem of the quality of financial data arises in many accounting studies. Generally, researchers tend to assume that financial data reflect a true and fair view of the financial situation and performance of reporting entities. This assumption holds even in research when the main phenomena may be closely related to errors or manipulations in financial statements, as in the case of the prediction of bankruptcy [3]. Serrano-Cinca et al. [2] claim that the accuracy of bankruptcy prediction may be affected by deliberate actions of managers that distort the picture of the financial situation. In their opinion, the majority of studies that try to predict business failure assume that accounts give a true and fair view of the financial position of a company, without considering that managers can discretionarily apply accounting rules or even perform accounting fraud. According to their study, several indicators proposed in the literature as earnings management proxies showed statistically significant differences between failed and non-failed firms [2]. Therefore, it is natural to assume that financial distress is a significant incentive to manipulate financial statements [5].
Frank Wood Financial Accounting 1 Answer Pdf
Both studies are relevant to our research, since both use data from less developed countries and both point to the quality of financial data as a necessary variable in the prediction of bankruptcy. However, accounting conservatism, which is also considered a measure of financial reporting quality, reduces the risk of bankruptcy [23]. Thus, we may conclude that the evidence is mixed on the sign but not on the significance of the influence of earnings quality on the financial statements manipulations. However, it is noteworthy that financial statements in these studies was measured with earnings quality proxy, which captures much, but not all, of the financial data quality phenomenon. 2ff7e9595c
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