Exercise: Case $1$

You are an accountant at one of the Big Four accounting firms. The IASB needs some advice from accounting practitioners to make certain amendments to the IASB's framework for preparing and presenting financial statements because it does not prescribe a specific approach to measurement. What is your opinion on the different approaches to cost accounting? What approach do you recommend and why?

guidance:

This question essentially asks students to compare and contrast different cost accounting methods that students have already studied in the textbook. To answer this question, students should first begin by describing the different methods of cost accounting and then compare them. In this process, students need to discuss the suitability of different cost accounting methods for different scenarios $($for example, for which type of company would historical cost accounting be more appropriate $$ for a manufacturing$-$based company or a service$-$based company; which type of cost accounting method is most appropriate general$).$ Furthermore, in this discussion students must justify their opinion about the suitability of a particular cost accounting method for certain types of business by explaining the characteristics of each cost accounting method and how it best describes different types of business.

This type of discussion is the main expectation for the type of question asked here. In addition to this, students can provide some examples of their own based on their reading from the textbook. But students should be able to realise and mention that no one method can be universally applied to all types of business. Depending on their characteristics, different methods are suitable for different types of business operations. Students may close the discussion by stating that there is a move towards fair value accounting recently. Especially after the crisis, it is treated as a better approach to historical cost accounting.

Please expand the explanation for the Master of Accounting student and add references if possible

note: I want to explain the methods of measurement, while taking the answer carefully so that it is perfect.

accounting theory & cost$.$

thanks