Question

Considering differing bases for accounting (cash, accrual) available, explain the legal rights, responsibilities, and liabilities involved when the accounting function is asked to take action(s) that may be inconsistent with the accounting basis that the company has traditionally used. Does it matter if this is a “one-time” shift, or not? Would it matter if the shift were not disclosed to the company’s lenders or the SEC? Why or why not?

Answer 1

The legal rights, responsibility of accounting is the responsibility the ethical responsibility an accountant has to those who rely on his or her work.
An accountant's responsibility may vary depending on the industry and type of accounting, auditing, or tax preparation being performed.
All accountants must perform their duties following all applicable principles,

Accountant responsibility varies slightly based on the accountant's relationship with the tax filer or business in question. Independent accountants with some clients see confidential information, ranging from personal Social Security numbers to business sales data, and must observe accountant-client privilege. They cannot share private personal or business data with competitors or others.

And the legal rights of

system of recording or settling accounts in financial transactions; the methods of determining income and expenses for tax and other financial purposes. Also, one of the remedies available for enforcing a right or redressing a wrong asserted in a lawsuit.

Various accounting methods may be employed. The accrual method shows expenses incurred and income earned for a given period of time whether or not such expenses and income have been actually paid or received by that time. The cash method records income and expenses only when monies have actually been received or paid out. The completed contract method reports gains or losses on certain long-term contracts. Gross income and expenses are recognized under this method in the tax year the contract is completed. The installment method of accounting is a way regulated utilities calculate depreciation for Income Tax purposes.

The cost method of accounting records the value of assets at their actual cost, and the fair value method uses the present market value for the recorded value of assets. Price level accounting is a modern method of valuing assets in a financial statement by showing their current value in comparison to the gross national product.

Where a court orders an accounting, the party against whom judgment is entered must file a complete statement with the court that accounts for his or her administration of the affairs at issue in the case. An accounting is proper for showing how an executor has managed the estate of a deceased person or for disclosing how a partner has been handling partnership business