Accounting Convention

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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The criteria are applicable to constant net asset value, variable/floating net asset value (NAV), and European low-volatility NAV (LVNAV) funds as the focus is on a manager's ability to avoid losses through limiting credit, market and liquidity risk rather than the particular accounting convention used to calculate NAV.
The Company has converted its accounting convention from the full-cost method to the successful efforts method, providing increased transparency and comparability to peers.
(The budget crude oil price is merely an accounting convention used to calculate projected revenues.
At the economy-wide level (Popescu and Ciurlau, 2017), accounting convention parallels returns and expenses, interest moving from an emphasis on profit (Popescu, 2017a, b) at the business level to one on output.
Depreciation is added back because it is a non-cash item reliant upon on the amount of fixed assets that a firm has and can be different for various firms based on accounting convention and level of fixed assets; it has no real bearing on the operational strength of a company.
Goodwill is an accounting convention that represents the amount paid for an acquisition over and above the fair value of its net assets.
Lower interest rates increase the present value of pension liabilities, raising the apparent cost of pensions awarded, but this is an accounting convention. Interest rates are not a determinant of the ultimate amount of pension payable; length of service, inflation, salary, and much more -- but not interest rates -- determine that amount.
One of these differences involves the use of historical cost based accounting, a prime accounting convention in the United States.
The Eugene-Springfield chapter of the Institute of Management Accountants features "Eugene Accounting Humor" as the central point of its Web page, including how you identify a Eugene CPA at an accounting convention. (`The pinstripes on his suit run horizontally.')
"From an accounting perspective, altering the way we handle depreciation is simply an accounting convention. The challenge comes if you have a lot of turf battles, where someone says, 'it has be like this'," she said.
Also, generally, fiscal years run from 1/1 to 12/31 by standard accounting convention. In Mexico, for tax purposes, merchandise purchaser prior to year-end may be included in cost of goods sold whether sold or not.
It's truly "the bottom line." By accounting convention, any loss is noted by placing parentheses around the numbers.

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