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In accounting, the convention of conservatism, also known as the doctrine of prudence, is a policy of anticipating possible future losses but not future gains. It states that when choosing between two solutions, the one that will be least likely to overstate assets and income should be selected.
It is argued that fair value accounting lacks all three attributes. [7] Some opponents may even suggest that historical cost accounting is more accurate by arguing that financial institutions are forced to record any permanent impairment in the market value of their assets. [6]
In American political theory, fiscal conservatism or economic conservatism [1] is a political and economic philosophy regarding fiscal policy and fiscal responsibility with an ideological basis in capitalism, individualism, limited government, and laissez-faire economics.
In 2006, the Financial Accounting Standards Board (FASB) implemented SFAS 157 in order to expand disclosures about fair value measurements in financial statements. [3] Fair-value accounting or "Mark-to-Market" is defined by FAS 157 as "a price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date".
The accounting equation (Assets = Liabilities + Owners' Equity) and financial statements are the main topics of financial accounting. The trial balance, which is usually prepared using the double-entry accounting system, forms the basis for preparing the financial statements.
As a result, financial reports could be viewed with fairness and transparency. When the U.S. switched to International accounting standards, they are composed that this would bring change. However, as a new chairperson of the SEC takes over the system, the transition brings a stronger review about the pros and cons of rules- based accounting.
Certain financial items may be recorded at historical cost which is the basic method of financial accounting. Any initial issue premium or discount is amortized to interest over time, and the resulting value is often described as amortized cost .
Liberal conservatism is a political ideology combining conservative policies with liberal stances, especially on economic issues but also on social and ethical matters, [1] representing a brand of political conservatism strongly influenced by liberalism.