Resolving the Mark-to Market vs Historical Cost debate: where do we go from here?

2020 ◽  
Vol 8 (7) ◽  
pp. 301-310
Author(s):  
Michael Chatham ◽  
Jerry Kopf
Keyword(s):  
Economic Crisis ◽  
Federal Reserve ◽  
Balance Sheet ◽  
Financial Statements ◽  
Financial Information ◽  
Historical Cost ◽  
The Past ◽  
Financial Condition

Mark-to-market accounting has been one of the most hotly debated changes in accounting. Some, including the past Federal Reserve Chairman, Ben Bernanke, cited it as one of the causes of the 2007-2008 U.S. economic crisis.  Many in the accounting community disagree with the Chairman and feel that movement away from historical cost has been a positive for transparency. Though countless individuals have voiced either their opposition or their support of mark-to-market accounting, each of them seems to view the debate as one between either historical cost or mark-to-market. After reviewing the arguments for both historical cost and mark-to-market in detail, we conclude the production of two financial statements, a traditional Balance Sheet based on historical costs, and a Statement of Financial Condition based on mark-to-market, would be relatively inexpensive to produce and would better provide the information needed by different users employing said financial information for, invariably, different purposes.

scholarly journals New Approaches to the Interpretation of Balance in the Digital Economy

2020 ◽  
Vol 17 (3) ◽  
pp. 25-36
Author(s):  
M. I. Lugachev ◽  
N. V. Ulianova ◽  
K. G. Skripkin
Keyword(s):  
Real Time ◽  
Balance Sheet ◽  
Forecast Model ◽  
Financial Capital ◽  
Selling Price ◽  
The Past ◽  
Financial Condition ◽  
Operating Profit ◽  
The Impact ◽  
Operating Activities

The purpose of the article is to theoretically prove the possibility of generating forecast information in the balance-sheet regarding profit indicators, net inflow of operating money and financial capital. According to the authors, the system of these indicators is revealed in dynamics, thus reflecting the impact of profit on the financial condition of the organization. A logical and accounting balance-sheet relationship is established between actual and forecast indicators that characterize the financial condition in the past and future. By analyzing the processes in the operating cycle, the economic and financial feasibility of operating profit as a net cash flow from operating activities is theoretically proved. Based on the process approach and the induction method, the indicator of operating profit is included in the valuation of the asset and liability side of the balance-sheet, thereby developing the valuation method and forming a new forecast model of balance-sheet generalizations. The content of the forecast model of balance is described in the form of a balance equation. The obtained theoretical conclusions are verified experimentally.As a result, the asset of the balance-sheet reflects the process of transforming the value of operational resources into their selling price, and the forecast operating profit is generated in the liability side of the balance-sheet, which relates to assets and liabilities recognized in accounting at the current time. Cost parameter and value index are introduced, which characterize the indicators of income and expenses as the transformation of operational resources. Any change in the cost of resources used and the possible price (value) of their sale is reflected in the balance-sheet and affects the change in the estimate of forecast operating profit in real time. At the same time, due to the simultaneous recognition in the balance-sheet of actual and forecast estimates of assets and liabilities and the indicator of forecast operating profit, the indicator of financial capital receives a new interpretation. If we compare the value of assets and accounts payable, then financial capital characterizes the security of operating activities with own sources of financing in the past. If we compare the selling price of assets and account payable, then financial capital shows the forecast for repayment of account payable at the expense of own funds in the future. Consequently, the transition from actual to forecast estimates in the balance-sheet reveals the process of the circulation of operating capital and shows how much profit is provided by investments in working stocks made in the past. Due to the double recording method, any forecast estimates can be verified by the user, which increases the reliability of the forecast information in the balance-sheet.In fact, the balance-sheet is interpreted as a new method of analysis and forecasting of financial and economic indicators characterizing the activities of the organization. At the same time, it is not necessary to perform additional analytical calculations, forecast operating profit and analysis of its impact on financial capital can be carried out in real time as often as accounting entries are made that affect the change in working capital.

scholarly journals Principals of Financial Modelling

2011 ◽  
Vol 3 (2) ◽  
pp. 75-88 ◽  
Author(s):  
Sławomir Janiszewski
Keyword(s):  
Financial Performance ◽  
Cash Flow ◽  
Balance Sheet ◽  
Financial Statements ◽  
Financial Modelling ◽  
The Past ◽  
The Future ◽  
Cash Flow Statement

Principals of Financial ModellingThe financial statements submitted by each company annually reflect their financial performance in the past but are also utilized to forecast the future results in quantitative and realistic frames. The aim of the following elaboration is to thoroughly research all the issues related to financial modelling. The author step by step introduces the reader with theoretical and practical assumptions related to forecasting of respectively, the profit & loss account, balance sheet account and cash flow statement. All of the issues are illustrated with excel spreadsheets that were prepared exclusively for this article purposes.

ANALISIS PENYAJIAN LAPORAN KEUANGAN KOPERASI SIMPAN PINJAM GLOBAL MANDIRI BERDASARKAN PSAK ETAP DESA BEO KABUPATEN TALAUD

2021 ◽  
pp. 105-117
Author(s):  
Jelwin Laliwu ◽  
Tinneke Evie Meggy Sumual ◽  
Linda. A. O Tanor
Keyword(s):  
Balance Sheet ◽  
Financial Statements ◽  
Financial Reports ◽  
Financial Condition ◽  
Savings And Loan

Penelitian ini bertujuan untuk mengetahui apakah laporan keuangan Koperasi Simpan Pinjam Global Mandiri telah sesuai dengan PSAK ETAP. Penelitian ini memiliki sebuah informasi mengenai bagaimana kondisi keuangan pada perusahaan, dan memiliki suatu tujuan yaitu untuk membantu pengguna dalam membuat sebuat keputusan. Hasil Analisis data dan pembahasan menunjukam bahwa Koperasi Simpan Pinjam Global Mandiri  belum sepenuhnya sesuai dengan PSAK ETAP, karena dari 6 Kategori yang terdiri dari Dasar pencatatan, Aset, Kewajiban, Ekuitas, Informasi yang disajikan, dan struktur terdapat 2 kategori yang tidak sesuai dengan ketentuan PSAK ETAP, yaitu tidak terdapatnya akun aset dan kewajiban pajak dan kesalahan dalam klasifikasi neraca.   Kata kunci : Analisis Laporan Keuangan Koperasi Simpan Pinjam Global Mandiri berdasarkan PSAK ETAP Abstrack This study aims to determine whether the financial statements of the Global Mandiri Savings and Loan Cooperative are in accordance with PSAK ETAP.This report has information about how the company’s financial condition is, and has a purpose, namely to assist users in making decisions. From the results of the research conducted, it truns out that the financial statements of independent global savings and loan cooperatives are not in accordance with the ETAP PSAK, because of the 7 groups presented there are not according to the reasons for not having an asset and liability account, also because they made an error when making a balance sheet classification.This research was conducted by taking documentation,conducting an interview and observation. Keywords : Anslysis of the financial reports of independent global savings and loan cooperative based on Etap accounts

scholarly journals The importance to financial information in the decision-making process in company’s family structure

2018 ◽  
Vol 63 (2) ◽  
pp. 38 ◽  
Author(s):  
Joana Patrícia Friães dos Santos ◽  
Amélia Maria Pires ◽  
Paula Odete Fernandes
Keyword(s):  
Decision Making ◽  
Balance Sheet ◽  
Investment Decisions ◽  
Financial Statements ◽  
Financial Information ◽  
Financial Impact ◽  
Decision Making Process ◽  
Current Management ◽  
Family Pattern ◽  
Income Statement

<p class="Pa10"> In Portugal most enterprises have a family pattern and an important role. Its importance is recognized and justifies the option to develop this research, which aims to determine whether these enterprises assign importance to financial information in the decision-making process. The work allowed gathering enough evidence to conclude on the importance of financial statements for the decision-making process, in par­ticular as regards the use of the balance sheet and income statement. It was also concluded that financial information is primarily used to assess the financial impact, support the current management, investment decisions and comply with tax obligations.</p>

scholarly journals Threat to Business Activity in Times of the Pandemic

2021 ◽  
Vol 18 ◽  
pp. 88-94
Author(s):  
Halina Chłodnicka
Keyword(s):  
Economic Activity ◽  
Balance Sheet ◽  
Financial Statements ◽  
Financial Information ◽  
Business Activity ◽  
Economic Decisions

The accuracy of economic decisions depends on the quality of financial information, coming mainlyfrom financial statements prepared by economic and other entities. In times of the pandemic, the threats tocontinuing economic activity appear to be greater. Hence, there is a need to develop hedging instruments. Goodinformation could protect many entities from the risk of bankruptcy. Such entities need transparent, easy tocalculate indicators informing them about the impending crisis. When analysing exposures in financialstatements, one can see that their volume is constantly increasing and recipients complain about the decreasingreadability. The aim of the article is to create such information which would allow the entrepreneur to reactquickly and dynamically to the weakening of his activity to create simple indicators to assess the situation, toseparate items on the balance sheet, which would pose a risk of bankruptcy

scholarly journals ANALISIS RASIO KEUANGAN SEBAGAI ALAT UKUR KINERJA PERUSAHAAN PADA PT. ASTALIA MILLENIA EDUCATINDO CABANG MADIUN

2013 ◽  
Vol 2 (1) ◽  
pp. 25
Author(s):  
Satrijo Budi Wibowo
Keyword(s):  
Financial Performance ◽  
Balance Sheet ◽  
Financial Statements ◽  
Profit Margin ◽  
Financial Condition ◽  
Operating Profit ◽  
Total Debt ◽  
Income Statement ◽  
And Performance ◽  
Solvency Ratio

<span>This study aims to determine the company's financial performance , both in terms of liquidity, solvency, profitability and activity of PT .Millennia Astalia Educatindo Madiun from 2010 until 2012. The processed data is the data that comprises the financial statements of the balance sheet and income statement. Methods of data processing by using ratio analysis consisting of the ratio liquidity, profitability, solvency and activities. The method used is descriptive method, the research seeks to collect and present data from the company to be analyzed so as to provide a fairly clear picture of the object under study. Because of financial ratios is one tool in evaluating the company's financial condition and performance , it is expected that through the analysis of financial statements may consideration in making decisions, especially regarding the financial condition in the future. Besides, the analysis of financial statements to describe the company's actual financial performance. The results showed that the ratio of liquidity include the current ratio and quick ratio increased, although still below the industry average. For profitability ratios include gross profit margin and operating profit margin increased in 2012 despite the decline was due to the increased cost of goods sold. Solvency ratios while covering a total debt to equity ratio and total debt to capital assets shows a marked improvement by decreasing solvency ratio from year to year. Nonetheless Solvency ratio still can’t to be categorized either as it is still above the industry average. The ratio of activity which includes receivable turnover and total asset turnover has fluctuated, rising in 2011 but dropped in 2012. Nonetheless Activity ratios are well below the industry average, which means the company has not been effective in utilizing existing resources.</span>

scholarly journals Analisis Penerapan Sak Etap Dalam Penyusunan Laporan Keuangan Koperasi ( Studi Kasus Pada KOPKAR PDAM Tirta Sanita )

2018 ◽  
Vol 4 (2) ◽  
pp. 075-083
Author(s):  
Hadi Nurdiansyah ◽  
Hendra Setiawan
Keyword(s):  
Balance Sheet ◽  
Field Research ◽  
Secondary Data ◽  
Financial Statements ◽  
Fair Value ◽  
Reporting Guidelines ◽  
Financial Statement ◽  
Historical Cost ◽  
Library Research ◽  
Descriptive Method

The purpose of this study is to analyze the application of IFRSs in the preparation of financial statements ETAP cooperatives, especially Cooperative Tirta Sanita. Analysis is performed to determine whether the financial statements have been applied by the Cooperatives is in accordance with GAAP ETAP set since July 2010. The analysis conducted in this study uses a descriptive method while selected data sources are secondary data from financial statements. The selected data collection procedures are obtained form library research, literatures, records, field research and interviews. The results showed that the Cooperative Tirta Sanita has been making adjustments in applying SAK ETAP in the preparation of its financial statements, but still not all the adjustments in the SAK ETAP have been applied in the preparation of its financial statements. This is evident with the availability of financial statements consisting of a balance sheet, profit/loss, change in equity, and cash flow statement. Cooperative Tirta Sanita using SAK ETAP with reporting guidelines still largely the same as before adopting IFRS GAAP General, therefor not too many significant changes occured. In other words, there was no significant effect happens on the application of GAAP in the financial statements Cooperative ETAP Tirta Sanita. Thus, financial statement reporting guidelines Cooperative Tirta Sanita with SAK ETAP is still using the principles of the historical cost method uses a different cost with SFAS General that is currently adopting IFRS using the fair value method. In general, this is the fundamental difference for the implementation of SAK ETAP.

Sustainable Economic Intelligence

2020 ◽  
pp. 117-143
Author(s):  
Ionescu Constantin Aurelian ◽  
Mihaela Denisa Coman ◽  
Liliana Paschia ◽  
Nicoleta Luminita Gudanescu Nicolau ◽  
Sorina Geanina Stanescu
Keyword(s):  
Economic Growth ◽  
Human Rights ◽  
Social Responsibility ◽  
Financial Performance ◽  
Global Economy ◽  
Balance Sheet ◽  
Scientific Research ◽  
Financial Statements ◽  
Financial Information ◽  
Sustainable Economic Growth

Sustainable economic intelligence, as a form of superior manifestation of an economy based on knowledge and innovation requires the management, quantification, monitoring, and reporting of non-financial information by economic entities (environmental issues, social and personnel aspects, respect the human rights and combating corruption) defined in relation to the average number of employees, total balance sheet, and net turnover. These elements, combined in the non-financial statements of economic entities, are decisive in achieving the transition to a sustainable global economy, combining profitability with social responsibility and environmental protection. The purpose of this scientific research is to achieve a systematization of the main non-financial performance indicators relevant to the activity of economic entities in Romania in order to favor sustainable economic growth and ensure transparency for stakeholders.

scholarly journals Peranan Penyusunan Laporan Keuangan Dalam Penyajian Informasi Keuangan Pada BMT At-Taqwa Muhammadiyah Sumatera Barat

2020 ◽  
Vol 8 (1) ◽  
pp. 14
Author(s):  
Leli Wita Suwita
Keyword(s):  
Balance Sheet ◽  
Financial Statements ◽  
Financial Information ◽  
Financial Statement ◽  
Financial Reports ◽  
Income Statement ◽  
Corporate Entity ◽  
West Sumatra ◽  
And Performance

This study aims to analyze how the role of financial statement preparation is to find out information relating to the financial position and performance of a corporate entity which includes the realization of the budget report, balance sheet, cash flow statement, and reports on the financial statement notes. The research method used is a qualitative method that compares financial statements between 2016 and 2018. The financial statements presented by BMT At-Taqwa Muhammadiyah West Sumatra in the form of a balance sheet and income statement, where an increase in value from the reporting date of the current year with the previous year, of the report there are still shortcomings in the reporting. BMT At-Taqwa Muhammadiyah West Sumatra is recommended to make all financial reports needed by financial information from BMT At-Taqwa Muhhammadiyah West Sumatra.Keywords: Role; Financial Statements; Financial Information.

scholarly journals ORGANIZATION AND IMPLEMENTATION OF EXTERNAL AUDIT QMS AT THE ENTERPRISE

2020 ◽  
Vol 5 (11(80)) ◽  
pp. 23-25
Author(s):  
N. Gavrikova ◽  
I. Chegnov ◽  
D. Tarkhanova
Keyword(s):  
Financial Statements ◽  
Financial Information ◽  
Financial Accounting ◽  
External Audit ◽  
Financial Condition

In this article, external audit is considered as one of the priority tools for implementation in an organization. It is aimed precisely at ensuring that information, in particular information about the financial statements of an enterprise, is not distorted in the course of its activity (especially important for investors who are actively studying the financial accounting of companies of interest to them for further investment in their shares or bonds). This allows you to maintain a stable financial condition of the company, contribute to its improvement, facilitate clear control of the flow of financial information and reduce the organization's credit debts.

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