what is the most prevalent type of argument used in the accounting industry?

Question

I'm writing a report for a logic class and am looking for a starting point

Answer 1

that math is not an opinion...

Answer 2

Goodness, I must be a complete nerd to be discussing this, but here we go...

The most prevalent argument in the accounting industry today is the "cost versus market value". This will make for a great report because you can talk about the history of accounting disclosure, why things changed, where the conflicts lie and where possible challenges lie in the future.

When I was a wee lad of an accountant, accounting policy was based on the principle of "lower of cost or market" (LCM), whereupon things were recorded at cost unless one could demonstrate that the realizable market value was less (usually on in marketable securities). If you bought something, it basically stayed on the books at cost.

Along came the 1990 and more importantly, the bust in early 2001. The "houses of cards" of all these previously thriving companies came crashing down as there were huge writedowns for many companies and in extreme cases - fraud. Public outcry was that the books didn't reflect reality. That cost was old and busted and things need to reflect what things were really worth. Fine. The upside is that your balance sheet gets revalued to be somewhat accurate. The downside is now your income statement is crap because it contains all these revaluation amounts. Furthermore, it flies in the face of the previous revenue recognition and matching principle (costs aren't being recognized at the same time!).

FASB works quite fastidiously, but they aren't the most nimble organization on the planet. So it takes time to come out with all the new FASB pronouncements - so you've got this weird transition period where some things are still based on "cost" and some things are based on "market".

Frankly, I liked the old way with rules that made accounting sense rather than things that made political sense... but that's just me.

Have fun on your report. I hope that helps.