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Title A defense on accounting discretion: an empirical inquiry based on users’ awareness
Authors Alharbi, A.M.
Al-Adeem, Khalid Rasheed
ORCID
Keywords корпорація
корпорация
corporation
вимірювання
измерение
measurement
корпоративна ефективність
корпоративная эффективность
corporate efficiency
облік доходу
учет дохода
income accounting
облік за нарахуванням
учет по начислению
accrual accounting
вибір
выбор
choice
облік
учет
accounting
процедури та методи
процедуры и методы
procedures and methods
професійне судження
профессиональное суждение
professional judgment
GAAP
реальність
реальность
reality
зрозумілість
понятность
intelligibility
Type Article
Date of Issue 2022
URI https://essuir.sumdu.edu.ua/handle/123456789/89519
Publisher Sumy State University
License Creative Commons Attribution 4.0 International License
Citation Alharbi, A. M. and Al-Adeem, K. R. (2022). A Defense on Accounting Discretion: An Empirical Inquiry based on Users’ Awareness. Financial Markets, Institutions and Risks, 6(3), 26-39. https://doi.org/10.21272/fmir.6(3).26-39.2022
Abstract Corporate performance is a key in corporate accounting. One of the earliest accounting measures of corporate performance is accounting income. Accrual accounting enables the measurement of changes in net assets of an entity. Accounting income is neither scientifically determined nor proven. Accounting information often results from approximation and estimation when choice among alternatives is professionally judged, rather than exact measures and perceptions. Divergence in application of accounting policies in corporations under similar conditions may present different results. Some criticize corporate accounting, particularly after scandals related to financial statement fraud, for choices among procedures that accounting standards permit. However, choices in the application of accounting permitted procedures that accounting standards allow are based on professional judgment. Professional judgment enables accounting as a profession and allows accounting professionals to claim status in their respective communities. Exploring users’ awareness of corporate reports in Saudi Arabia in terms of flexibility in using accounting methods when preparing corporate reports and analyzing their understanding of corporate reports, this study surveyed 72 financial statement users. Research has found that sufficient efforts must be made to obtain information when making investment decisions. As accounting income is a result of applied accounting procedures and methods, users perceive information published in the financial reports, including notes, as understandable. Flexibility in applying accounting standards is imperative for adapting to changes in the entity’s business environment. Potential capital market investors must maintain a minimum level of knowledge; otherwise, they might be gambling their wealth or savings against the odds.
Appears in Collections: Financial Markets, Institutions and Risks (FMIR)

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