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Management accounting - financial reporting Essay

Category: Finance & Accounting Pages: 12 Type: Essay Level: College
The study reveals that Australian companies are early adopters while Indian companies are late adopters.

The final study discussed by Damant (2003) in this work deals with a specific aspect of financial accounting, the income statement. The author of the study supports the view that a proposed change is needed to the traditional profit and loss account to promote better understanding and transparency in reporting. Although it is evident from the study that financial accounting requires a standardized format across companies and industries to enable comparisons and benchmarking, the author is of the opinion that implementing the new matrix would clear away many past and present difficulties in financial reporting.

Theoretical insights by the authors
According to Waweru et al (2004), all organizations are subject to their external environment and are dependant on them for their inputs and their output. "A company has to maintain a consistent relationship with the environment for its success." The changes in the external environment cause a rippling effect that causes alterations in the management accounting principles adopted by a company. The authors concur with the statement and conducts further research to identify the factors that induce and hinder the companies to alter their management accounting principles. Studies have proved that the political, social, economic and cultural aspects that surround a company influence its management accounting practices. Bearing in mind the diverse conditions under which companies operate, developing countries are cautioned against adopting principles practiced by the developed countries.

Joshi (2001) also supports previous studies conducted concerning management accounting