Reflection On The Assumption Of Accounting Entity

Any discipline is based on certain assumptions.

Accounting is also based on a series of assumptions.

The generally accepted accounting assumptions include: accounting entity assumption, continuous operation hypothesis, accounting stage hypothesis and monetary measurement hypothesis.

The theory and practice of traditional accounting are based on these four assumptions, which constitute the most basic part of accounting theory.

But any hypothesis is uncertain, and the change of hypothesis can often promote the development of the theory.

Accounting theory is the product of social environment. Accounting assumption is a reasonable inference based on the social and economic environment of enterprises.

With the progress of society, accounting theory should also be developed.

The current accounting system in China has reached the point where it can not be changed. It needs comprehensive and essential reforms.

Accounting assumption is in the most basic position of accounting theory. The assumption of accounting entity also restricts other assumptions. Therefore, it is necessary for us to have a deep reflection on the assumption of accounting entity.

The accounting entity of an enterprise entity theory, also known as accounting entity or accounting entity, refers to the specific unit that accounting work serves for it.

The accounting entity hypothesis determines the spatial scope for accounting work, provides a basis for determining the economic resources and business accounting for specific enterprises, and also provides a basis for the scope of records and statements.

The assumption of accounting entity arises from the early stage of industrial economy.

The development of commodity economy objectively requires the stability of enterprises.

In order to adapt to this requirement, the accounting profession put forward the assumption of accounting entity.

However, the advent of the knowledge economy era, the emergence of the theory of sustainable development and the impact of asymmetric information theory on the separation of the two powers and the principal-agent theory have challenged the theory of enterprise entities.

Two, the influence of knowledge economy on the theory of enterprise's main body, 1 virtual enterprises, the current society is the era of knowledge economy.

With the rapid development of science and technology and network technology, accounting environment has been greatly improved.

There are many virtual enterprises on the Internet. These enterprises are invisible, some do not have the characteristics of accounting entities, and how to define the accounting entity is a difficult problem.

Moreover, the virtual enterprise often dissolves or reconstructs in a very short time. In fact, the scale of the entity expands and shrinks, which has shaken the theoretical foundation of the relative stability of the accounting entity.

The 2 traditional business entity theory focuses on the dominant position of the company.

In the era of knowledge economy, the focus of economic form has shifted.

The manufacturing and processing format of products with simple labor as the main form of labor is no longer the focus of economic formation. Instead, it is the creation of value-added products or services with high technology content and complex labor as the main form of labor.

In other words, technology is merely an externalized form of human intelligence.

Therefore, accountants should attach importance to the accounting of human resources.

On the one hand, the training funds for employees are greatly increased, and the capitalization of them will cause distortion of accounting information. Therefore, human resources assets should be added to assets. On the other hand, the rights and interests of workers should be established in order to maintain the relative stability of technical personnel in enterprises.

So the accounting identity is revised as "material assets + human assets = Liabilities + owners' equity + workers' rights and interests".

Three, the impact of sustainable development on the main body of enterprises. Sustainable development requires enterprises to pay attention to environmental protection, pay attention to the stability and prosperity of the society, relieve the pressure of employment in the society, and require enterprises to shoulder more social responsibilities.

After 1 years of environmental protection, the environmental problem is becoming more and more serious. There is a tension between mankind and nature, ecology and economy in 1940s.

With the rapid development of Western technology, enterprises have to sacrifice their environment for profiteering, and governments have to take tough measures to stop them.

The traditional theory of enterprise subject only emphasizes the interests of owners and creditors, and the main position of the company, which objectively conforms to the destruction of the environment by enterprises.

Enterprises should restrain their actions, internalize their responsibilities for environmental protection, and assume their social responsibilities.

We should consider the social rights and interests from the accounting entity.

2 the theoretical basis of increasing social rights and interests. The traditional theory of enterprise subject holds that the capital of an enterprise is composed of the owner's equity investment and creditor's debt investment. Therefore, an enterprise should be responsible for its shareholders and creditors. The rights and interests of the accounting identities should include two parts: the stockholders' equity and the creditor's rights and interests.

In fact, although the public, the social economic environment and the natural ecological environment do not directly invest in enterprises, they provide a space for the enterprises to survive and develop. Without the social environment and natural environment, enterprises can not survive and develop.

Therefore, the society contributes to the enterprise. In turn, the enterprise should return to the society and be accountable to the society. The equity of accounting identity should be added to the social rights and interests.

Four, the influence of information asymmetry theory on the theory of enterprise's main body. In the early twentieth Century, with the appearance of Limited by Share Ltd, the management mode of separation of ownership from management and the principal-agent theory for its service were generated.

The theory of enterprise subject has adapted to this practical requirement, and has supported this new management mode from the angle of accounting, and has played a positive role in practice.

However, with the development of economy, management theory has changed. The theory of asymmetric information has challenged the mode of separation of the two powers, and the theory of enterprise entities has gradually lost its realistic foundation.

The separation of ownership and management rights is a practice rather than a theory. 1

The separation of the two powers is a passive choice, and there is no sufficient theoretical support. There is no reason why the separation of the two powers will bring benefits to the enterprises.

The essence of the separation of the two powers is how to make the manager represent the interests of the owners.

This problem not only failed to solve effectively, but increasingly exposed its limitations and negative effects.

The reform of state owned enterprises in China is based on the separation of the two powers, but this does not cure the stubborn ills of state-owned enterprises, and the problem of the loss of state assets and the lack of enthusiasm of employees is more serious.

Thus, the separation of the two powers is not an ideal management mode.

2 principal-agent theory, with the separation of ownership from management, produces principal-agent theory.

The theory holds that the relationship between the principal and the agent is a contractual relationship, and the principal gives the agent considerable autonomy in decision-making.

Because of the asymmetry and incompleteness of information, it is difficult for clients to monitor and control the activities of agents.

In order to reduce the efficiency loss caused by principal-agent relationship, economists put forward various schemes.

First, let the agent become the owner of the residual interest; second, use the market mechanism to restrain the operator's behavior; third, design effective incentive plan; fourth, improve and perfect the corporate governance organ, and strengthen the shareholder's restriction mechanism to the board of directors.

Although the above methods play a positive role in solving the agency problem, they are unable to solve the problem fundamentally because of various limitations.

In short, the traditional accounting theory is facing major changes. The accounting entity assumption, which is in its most basic position, faces many challenges.

The new economic environment and new management theory call for a breakthrough in the accounting entity assumption.