Accounting Convention

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Accounting Convention

An accounting procedure used informally. That is, an accounting convention has been neither endorsed nor prohibited by the SEC or another appropriate body. In general, when the SEC has neither endorsed nor prohibited an accounting convention, it is because it has not needed to rule on the matter, especially if the convention is new. A ruling may formalize or forbid a convention, or it may make the convention obsolete.
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Michael Evans, CEO at PrecisionPoint explains, "If the BI software is to serve the needs of the accountants then it must understand the accounting conventions that are engineered into the ERP system.
These accounts are designed to provide a comprehensive picture of economic activity within an integrated framework based on consistent definitions, classifications, and accounting conventions.
After debate on these and related issues, it is decided to adopt accounting conventions that will enhance the reporting of revenues, defer realization of expenses and write-offs, and show the optimum earnings picture for Comcom.
Investors may well adjust the first component to eliminate peculiarities of accounting conventions.
The finance manager has displayed a serious lack of basic knowledge of accounting conventions and a worrying lack of knowledge about the financial position of the company.
More precisely, what can we say about the likely impact of alternative accounting conventions on politicians' current resource-allocation decisions?
Regulators note that reporting in this fashion departs from traditional accounting conventions and can make it hard for investors to compare financial information with other reporting periods and other companies.
Productivity is a ratio of output to input, and the way we measure aggregate output was set in stone by national income accounting conventions agreed upon many decades ago to measure an economy that produced wheat and steel and services that were more or less unchanging in nature.
The team developed operating practices, accounting conventions and an implementation plan, and secured buy-in from the entire organization.
The return we are talking about here, of course, is the return on cash flows otherwise known as internal rate of return (IRR), not return on equity or return on investment as calculated by accounting conventions.
A company should use accounting conventions consistently, and the choice of accounting conventions for valuing inventory does affect the amount an insured can recover under business income insurance.

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