If we all have different receptions of reality then the big question is; do we know real true picture of reality? Reality in accounting is something I believe is very hard for us people to determine. Firstly is that most of the measurement used in the accounting system are arbitrary. How can we know that something which is based on random choice or personal whim, rather than any reason or systems is “the truth”? Secondly accounting is also based on assumptions. So what is seems like that in accounting there is no such thing as reality.
Obviously we couldn’t know what is true if methods of accounting are based on arbitrary methods and assumptions. If this is so, then again the big question is; how can accountants communicate reality if we don’t know what is reality. A. In the given question, the directors decision on deciding not to life the going concern assumption while the company’s performance and position is deteriorating is totally wrong and unethical. The company knew very well that there are people out there who are going to rely on their financial decisions to make very important decisions.
Not lifting the going concern assumption will make stakeholders think especially primary users that the company’s financial performance and position is going well and healthy when in act it’s not. In this case the directors are communicating a false reality. B. Well communicating a false reality doesn’t mean that also you are creating a false reality. For God. Anything can happen in the future. Revenue might increase as well as sales, profit might increase and the business might again run well. In this case the company is creating a reality. . ) Fiji Sugar Corporation. The Fiji Sugar Corporation is said to be responsible for the pollution of the Aqua River in Labs. The question to ask is whether the Fiji Sugar Corporation (FCC) is really responsible for the pollution of the Aqua River that had resulted in the killing f the marine life. Or is the waste dumped by the FCC in the Aqua River the cause of pollution. It is being evident that the waste dumped by FCC to the river is the direct cause of the killing of the marine life in the river. (http://www. If]times. Mom) (The Fiji Times, 24/12/08) “Last year we took samples from the river and results confirmed that the chemicals were from FCC so this new testing is part of our prosecution process. ” Mr… Kumar Tests result shows that the death of river plants and vaporizing useful gases is the result of a rise in temperature in the river that was caused by hot water being poured into the Aqua River.. All Saints Secondary School students and hundreds of residents beside the river complained of headache as a result of the pollution by FCC. (http://www. If]times. Mom) (Fiji times, 03/09/09) With the evidence given above, can we say that the organization is responsible for the pollution of the Aqua River? Ruth D Hines said that we must not think that the fence of the organization sets the limit or the boundary of the organization. The only thing the fence does is to separate the other people from the organization or to designate it so to speak. Well in terms of pollution, I do agree that the organization is responsible for the pollution. As evident above that the waste dumped by the FCC is the direct cause of the pollution which had an adverse effect on the river, environment and the people.
If it wasn’t for the organization dumping rubbish into the river there wouldn’t have been any pollution. Hines also said that we should account for something that we are accountable for. It would be unethical for FCC not to account for the pollution caused by them. Even though we might think that the pollution is outside of the organizations context but in reality we know that the damage to the environment is directly caused by pollution by the organization. As a conclusion we can say that pollution is very much part of the organization. As it is the direct effect and outcome of the production process of the organization.
So Fiji Sugar Corporation should account for the pollution. B. ) The organization is now placing more significance on sustaining a clean environment in particular waste water release from mill operation and air pollution not only for its staff but its stakeholders too. The organization is aiming on the execution of various engineering controls. This will result in the minimization of waste to the environment and by doing this they will e adhering to the Mill Upgrade Program. All mills around the country had formed committees that will observe and address pollution. Annual report 2010). Recognizing revenue in the period or periods that the revenue-generating activities of the companies are performed is the objective of the firm. There are two conditions that needs to be satisfied before revenue can be recognized in the realization principle: 1 . “The earnings process is Judged to be complete or virtually complete (the earnings process refers to the activity or activities performed by the company to generate revenue). ” 2. There is reasonable certainty as to the collegiality of the asset to be received (usually)” (http://connect. McGraw-hill. Mom) Businesses recognize revenues ate different point in time due to a number of reasons: Businesses are different in nature. The activities performed by the companies to generate revenue are differently judged to be complete. It because of these two catteries that revenue are differently recognized. For example revenue from selling of inventory are recognized at the date of sale often interpreted as the date of delivery. This is because at the date of delivery the earnings process is Judged to be complete. For revenue from rendering services are recognized when services are completed and billed.