HI6025 Accounting Theory and Current Issues
The entire report has constructed for understanding the accounting theory and current issues regarding the financial activities. The study has described the activity based costing and the possibilities of the development the financial progress to construct the strategic management accounting system and commodification of labours of the company. In order to enhance the usage of the activity based costing it is recommended to improve the internal activities with the help of implementing the strategies and company practices.
The study is about to describe the accounting theory and current issues regarding articulate the facts. The primary research will demonstrate about the selected topic such as activity based costing and the use of it in the current phenomena. Furthermore, the research will generate the major implication regarding the findings with the help of three major aspects such as, accounting regulators, accountant in Australian companies and specific external user of financial reports. The study will also emphasize the similarities as well as the differences between the two selected topics, which are Strategic management accounting, and Capital practices of the firms and the commodification of labour. The entire study will illustrate the findings from the journal articles and the usefulness of financial reporting in Australian companies.
1. Reason behind the selection of two research articles
Activity based costing process is far more useful, appropriate, time consuming and reasonable in compare to the traditional costing methods. The implication of activity based costing can generate the accuracy in terms of complementing the accounting activities in the organisation. On contrary, the traditional costing assigns the cost of products based on the average overhead rate, pulls the indirect cost, and equally distributed in every segment. The two research articles are strategic management accounting and capital practices of firms. In strategic accounting, management study the activity based costing pays an impact to make the operations much faster (Langfield-Smith, K. 2008). The intellectual capital a practice of firms also depends upon the activity based costing to provide the commodification of labours. These two articles are considered by the techniques of activity based costing to enhance the administrative activities in an organisation. Furthermore, in order to establish the steady growth of the business activity based costing method is very useful. Costing is generally used in business accounting strategies for determining the cost of production to increase the total revenue of the business. Costing is also used for the purpose of the company practices through which the company can maintain the overall activities regarding the labour costing as well as the workers overheads. The implementation of activity based costing can emphasize the company practices, market value of the products and commodity markets (Abeysekera, I. (2008).
2. Explanation of the purpose of the two studies and explore about the topics
In accordance to construct the entire report two-research article have been selected for articulating the research work. One article is about the strategic management accounting and the implementation of activity based costing procedures. The purpose of the article is to generate the skills about the origins of the strategic management accounting techniques and the success of implementing the activity based accounting in SMA. The purpose to selecting the topic is that the strategic management systems have not been used widely. However, the techniques are capable to understand the business management methodology and help to influence the thought process by which companies can generate the productivity and profitability in a faster way. Moreover, in order to apply the activity based costing can influence the budgetary control of business management processes to achieve the target with maintaining the cost effectiveness and proper time management process (Dale & Plunkett, 2017).
The second article is about the intellectual capital practices of firms and the commodification of labour. The purpose to select the study is to evaluate the nature of capital practices and the implementation of the actual techniques of activity based costing for measuring and reporting of the intellectual capital. Furthermore, the topic demonstrates the process of commodification of the labour with the help of capital practices rather than using the contradiction of the market value improvisation to implement the activity based costing methodology. The capital reporting can be improved by using proper framework of management activities (Kaplan et al., 2014).
3. Brief discussion about the similarities and differences in the findings of the two studies
The critical analysis of both the topics has implemented some similarities and differences in business aspects. The strategic management accounting procedures can indicate the strategic perspective to manage the business activities regarding the acceptance of the methodology to enhance the growth of the business (Dashtbayaz, Mohammadi & Mohammadi, 2014). However, many researchers have anticipated that this technique is not promoting the authenticity and the accounting management is only a matter of time to increase the business potentiality. On the other hand, intellectual capital practices imply the recent use of the modern techniques to enhance the business productivity, which can pay an effect of replacing the manual work of labourers. The similarity is the utilisation of the activity based costing can generate the awareness regarding the business enlargement. The activity based costing can generate the cost effectiveness and time consumption, which can add additional values in both of the articles. The similarity of implementing the activity based costing can generate the accuracy of the business functions.
The difference of the finding is that in strategic management accounting the activity based costing can help directly by applying the budgetary functions of the business, whereas in capital practices and commodification of the labour the activity based costing can be applied indirectly. Another difference in SMA is that the activity based costing can generate the management accounting to improve the cost management strategies. On the other hand activity based costing can eliminate the business internal conflicts to generate the business potentiality.
4. Major implications of the research findings
i) Accountants in Australian companies: A large number of companies in Australia are adopted the strategic management accounting rules to implementing the business activities so that the company can generate the productivity much faster way. The role of the accountants of big companies is different. The responsibility of accountants is big in terms of company’s growth structures. Strategic can maintain the continuous growth in development. The managers of the company to enhance the strategy development in decision-making process adopt the activity based costing processes. On the other hand, capital practices are also categorised in the Australian company. The usage of technology by implementing the activity based costing can evaluate the labour overhead. The accountants are responsible to the entire accounting procedures of the company. They also maintain the company practices. The activity based costing can make the job easy for the accountants to generate the awareness of the business penetration (Bepari & Mollik, 2016).
ii) Accounting regulators: The Australian Accounting Standards Board is an agency, which is controlled by the government agency of Australia. The agency is responsible to emphasize the financial reporting standards for both the private and public sectors. The set of legitimated regulations are imposed by the AASB to control the activities of each entities of the business. Accounting regulators investigate the entire activity based costing procedures to maintain the activities regarding the fraudulent activities. The member of regulatory can control the business functions in terms of protecting the business practices in a legal way. The regulators are also responsible to generate the work ethics to develop the employee’s outlook. The commodification of labours is also an issue of concern, which is also regulated by the Australian government agency (Pai & Tolleson, 2015).
iii) One specific external user of financial reports: External users are those who are using the accounting information from outside the business organisation. Investors or shareholders are there who tend to invest their money to purchase the share after investing the companies share growth and equity shares analyzation. Shareholders examine the financial reports of the company to evaluate the business performances over the past few years to understand the nature of progress in productivity and profitability of the business. The shareholders have the right to manage about the investment. Both the creditors and equity investors invest after investing the relevant financial information of accounting activities. Financial statements including the cash flow statement, income statement and balance sheet statement. The investors can assume the amount of earnings by investigating the financial position of the company.
The entire study implies the literature review of two different topics in which the activity based costing has illustrated. The study also generates the importance of the activity based costing in the business enlargement. Furthermore, the study has reflected the similarities and differences of two selected articles. Lastly, the study has illustrated the major implication with based on the findings of two articles. The study has also demonstrated the findings of the capability of activity based costing in terms of evaluating the procedures with the help of three aspects such as Accountants of the Australian company, accounting regulators, and one external users of financial reporting.