According to Chambers (as quoted in Riahi, Belkaoui, 2004, pp. 496-7)

"At any present time, all past prices are simply a matter of history. Only present prices have any bearing on the choice of an action. The price of a good ten years ago has no more relation

to this question than the hypothetical price 20 years hence.... no useful inference may be drawn from past prices which has a necessary bearing on present capacity to operate in a market..." What does Chambers mean by this statement? Critically evaluate whether Continuously Contemporary Accounting (CoCoA - Chambers method of accounting), adequately addresses the problems he alludes to.

Question 2 - 750 words (4 marks)

According to Hines (1991, p.38):

"Conceptual framework projects continue to be undertaken which rely on information qualities such as 'representative faithfulness', 'neutrality', 'reliability', etc., which presume a concrete, objective world, even though past conceptual fameworks have not succeeded in generating accounting standards which achieve these qualities. The very talk, predicated on the assumption of an objective world to which accounts have privileged access via their 'measurement expertise', serves to construct a perceived legitimacy for the profession's power and autonomy".

What does Hines mean by this statement? Are conceptual frameworks an example of political action to ensure the legitimacy of the accounting profession, or do they exist for other reasons? Justify your response.

Question 3 - 750 words (4 marks)

Historical cost accounting continues to be used to prepare financial accounts within annual reports and can be classified as a normative theory. Identify three criteria that can be used to evaluate a theory and apply these to historical cost accounting. Briefly explain why you think historical cost accounting continues to be used as a measurement basis within finanical reporting.

In addition to the marks above, 2 marks are allocated for academic writing, and 1 mark is allocated for referencing.

RATIONALE

This assessment task will assess the following learning outcome/s:

• be able to critically evaluate attempts to develop and apply a conceptual framework.

• be able to critically appraise the objectives of accounting and relate them to the various concepts of accounting discussed in earlier subjects.

• be able to analyse the possible usefulness of alternative measurement systems to historical cost.

Answer rating: 100% (QA)

Answer Continuously Contemporary Accounting is a method of accounting that defines a companys financ... View the full answer