IntroductiontoFinancialAccountingTheory文件材料.pptx

Financial Accounting Theory Course OutlineTextbookGrading SchemeClass participation: 10%Homework assignment: 15%Group project: 15%Final Exam: 60%1.2-1.3 Historical Perspective of Accounting1494 - 1700s - 1929 - 2001 - Accounting MilestonesLuca Paciolo: double-entry systemJoint stock company first appeared in EnglandStock market crash Large-scale accounting scandals Market meltdown 1494 -Paciolo (1494): The first complete description of the double-entry bookkeeping system Paciolo did not invent the system; it had developed over a long period of time.Accounting is mainly used by business person to control day-to-day business operation1700 -Joint stock company Accounting system gradually shifted to inform investors of firm’s operation1844 Companies Act A law that first requires audited financial statements The law was dropped a few years later, and was re-instated in early 1900sAccounting largely unregulatedFinancial reporting largely voluntaryE.g. amortization of capital assetAccounting center gradually transferred to U.S1929 -1929 stock market crash09/23/1929, peak of Dow Jones was 38110/28/1929, 12.8% drop in one day closing at 26110/29/1929, another 11.7% drop closing at 23007/08/1932, closing at 41 (an 89% decline from 381)1929 -Major contributing factors of 1929 crashNumerous instances of manipulating financial reporting and other abuses Accounting reports are based on widely varying accounting practicesPlanted the seeds for regulationSpeedy passage of Securities Act in 1933Creation of SEC increation of SECA move-away from business’ self-regulationEventual message was that unless the profession established an authoritative body for the development of accounting standards, The SEC would do so and SEC would mandate the required reports How does accounting profession survive in a regulated environment?If SEC takes over, the prestige and influence of the profession would be greatly erodedMust persuade SEC that the profession can do satisfactory job to prote