Accounting Measurement of Owners’ Equity and its Impact on the Going-Concern of Companies

7/30/2019 Accounting Measurement of Owners Equity and its Impact on the Going-Concern of Companies

1/22

Research Journal of Finance and Acc

ISSN 2222-1697 (Paper) ISSN 2222-

Vol.4, No.5, 2013

Accounting Measure

the G

An Empirical S

shareholding

Dr: Haithm Idris Mohammed Al-M

H

Dr: Saad Abdulkareem Al-Sak

Dr: Othman Hussein Othman

Abstract:

Research aims at studying the accoun

and its impact on the concept of co

public shareholding companies listed

A random sample of (120) questionn

whereas (2) excluded and the rest (9

analyze the data of the questionnair

were positive to wards the variables o

The study showed that there was a s

company's Going-Concern which wa

significant impact relation between th

accounting information's equity whiimpact relation between the multipli

company which was medium but no

multiplicity of the accounting meas

companies which was good but not st

1.Introduction:

Owners equity is one of the most vita

general, Owners equity constitute th

loss and capital additions so that the

decrease as a result of losses and wit

assets after deducting liabilities, it i

example, in joint stock companies, t

shareholders which is representedredistribution of profits to preserve th

future expansions of the company whi

Such classifications are probably app

where they can clarify legal or othe

equity. They can also reflect the fact

rights. The total Owner equity that

accounting measurement for assets an

Owners equity is one of the most si

reflect the rights and contributions

preserve the capital from decrease as

unting

847 (Online)

160

ent of Owners Equity and its

ing-Concern of Companies

tudy of a sample of Jordanian p

ompanies listed on Amman Sto

baideen, Isra University , P.O Box 22, code 11622,A

[email protected]

ini, Isra University , P.O Box 22, code 11622,Amman

[email protected]

, Isra University , P.O Box 22, code 11622,Amman

[email protected]

ing measurement of Owners equity

pany's going - concern, "An empirical study of a s

on Amman Stock exchange ."

aires was selected. The number of the retrieved que

) was valid for analysis. The descriptive analytical

using SPSS. results revealed that the trends of the

f the study variable of information quality was the mo

atistically significant relation between Owner equity

s good but not strong. The study indicated that ther

e existence of afinancial reporting standard for Owne

ch was medium but not strong, there was also a staity of accounting measurement methods and the Go

t strong as well as a statically significant impact r

rement methods of owners equity and the failure

ong.

items the a financial position it represent of rights th

liabilities of a company towards owners where the

are greater when the profits and the capital additio

drawals. Despite the fact that Owner equity are the r

s to say that they include important sub-classificati

ey may appear in separate items which represent all

y authorized capital, retained earnings and reserve capital and promote the financial position of the co

ch is usually represented in the increase of the assets

ropriate to the needs of making decisions by the us

restrictions on the ability of the entity to use and

that some have shares in the ownership of the projec

are in the statement of the financial position dep

d liabilities.

gnificant items on the list of the financial position

wners in the capital of the entity. The aim of any

a result of distributing fake profits from the main capi

www.iiste.org

Impact on

ublic

ck.

man Jordan

Jordan

Jordan

ample of Jordanian

tionnaires was 100

ethod was used to

sample individuals

st agreed upon .

and the concert of

was a statistically

rs equity and of the

istically significanting-Concern of the

lation between the

and bankruptcy of

e project owners. In

affected by profit,

s are greater while

maining balance of

ns on budget. For

funds provided by

es that represent apany as well as for

of the entity.

rs of financial lists

istribute its Owner

that have different

nd on an accurate

aximize width . it

entity is to profit,

al and as a result of


2/22


ISSN 2222-1697 (Paper) ISSN 2222-

Vol.4, No.5, 2013

the instability of the unit of cash me

important item of Owner equity.

2.Study Significance :

The significance of the study brings

subject of Owner equity and all thei

Previous studies have just concentrat

the most important causes of financi

thereof as well as liquidation is beca

all Owner equity items are determ

standard for measuring all the assets

fair value while tangible assets are m

total income according to the basis of

Study Objectives

3.This study aims at demonstrating

1. studying to which extent it is possi

Owner equity.

2. Studying the circumstances in whic

3. Studying reserves and their classi

they be stopped or capitalized to incre

4. Demonstrating how reserves can b

be stopped or capitalized.

5. Measuring the impact of Owner eq

6. Measuring the impact of having a

information.

7. Measuring the impact of the multi

on the Going-Concern of the business

8. Measuring the impact of the multi

on the failure and bankruptcy of com

4. Problem of the study :

The problem of the study lies behind

especially involving reserves, uses an

still there is no clear in spite of the i

In addition, there is no definition fo

supposed to be held. Moreover, inte

losses and how they can be extingu

sometimes extinguish their accumul

Accounting standards did not concent

Based on this , the problem of the stu

1. Are held reserves and earnings no

company effectively?

2. How accumulated losses of compa

its losses for held earnings and reser

should be put on different companies

3. The mechanism of additional cap

company and how they can be exting

4. Do entities face a problem of liqui

the bank?

unting

847 (Online)

161

surement caused by inflation. Retained reserves and

from being one of a few number of the studies that

r items that is besides its importance in the Going-

e on one item or more of Owner equity. Researchers

al crises , the failure of many international compan

se of not having a financial reporting standard of O

ned and accountingly processed and not determin

f a company where current assets are measured in ac

easured in accordance with their historical cost whic

maturity that reflects also on Owner equity.

and processing:

ble developing a single standard called a financial re

h companies resort to use Owner equity to stop their l

ications, their objectives and how are they calculate

ase the capital of a bussiness

used, their objectives and how are they calculated an

ity on the Going-Concern of an entity.

inancial reporting standard on Owner equity on the q

licity of the accounting measurement methods of ite

.

licity of the accounting measurement methods of ite

anies.

the uncertainty of owner equity section the paragrap

d not having an accounting standard on processing O

portance of all the items of Owner equity as they are

capital, reserves and what they aim at as well as th

national accounting standards did not show the acc

ished in case losses exceed 75% of a capital since

ted losses of reserves with no justification or a sta

rate enough on showing changes of Owner equity and

dy is summarized attempting to answer the following

inal as they should in fact be or should they held fro

ies can be extinguished, when it is allowed for a co

es and when should a company increase the capital

at losses?

tal accounting process (share premium) when issui

ished?

ity or cash failure if retained reserves and earnings a

www.iiste.org

profits represent an

concentrate on the

oncern of entities.

suggest that one of

ies and bankruptcy

ner equity at which

ing an appropriate

cordance with their

is the result of the

orting standard for

osses.

d and when should

d when should they

ality of accounting

s of Owner equity

s of Owner equity

hs of Owner equity

ner equity because

not actually present.

e fact that are they

ounting process for

some entities may

dard allowing this.

reserve rates.

questions:

m the earnings of a

pany to extinguish

and conditions that

g new shares of a

re held with cash at


3/22


ISSN 2222-1697 (Paper) ISSN 2222-

Vol.4, No.5, 2013

5. Is there a signification effect betw

equity and the Going-Concern of a bu

6. Is there a signification effect betwfinancial reporting standard on Owne

7. Is there a signification effect bet

multiplicity of the accounting meas

business.

8 . Is there a signification effect be

multiplicity of the accounting measur

companies?

5.Study Hypotheses :

Based on the study objectives, the foll

H1: There is no relationship statistic

business.

H2: There is no relationship statisticOwner equity and the quality of acco

H3: There is no a relationship stat

measurement methods of items of O

H4: There is no a relationship stat

measurement methods of items of O

6.Study Methodology :

The researchers have used the descrip

the descriptive method through acce

method, the study has adapted the fi

from the sample individuals to anal

questions.

Study Community and Sample

The community of the study consist

accounting and Jordanian legal audito

The researchers have selected a simpl

is (120) questionnaires. The recovere

cancelled. The valid ones however ar

Resources of Collecting Information

The researcher has used two main res

- Secondary Resources: they are the l

the framework of the present study w

- Primary Resources: they are the dat

reflect the hypotheses and variables o

Study Tool

The researchers will design the studthe study variables as follows: first p

demographic or personal and functi

experience, job title). Second part: i

Jordanian limited companies use all it

The questionnaire will be designed b

can be taken (strongly agree, agree, n

given for the purposes of statistical a

The questionnaire consists of two p

scientific qualification, experience, jo

study which has been divided into six

unting

847 (Online)

162

een Is there a relationship statistically significant eff

siness?

en Is there a relationship statistically significant effeequity and the quality of accounting information?

een Is there a relationship statistically significant

rement methods of items of Owner equity on the

ween Is there a relationship statistically significant

ement methods of items of Owner equity on the failur

owing hypotheses can be formulated:

lly significant effect between Owner equity and the

ally significant effect between having a financial renting information

istically significant effect between the multiplicity

ner equity on the Goning-Concern of the business.

istically significant effect between the multiplicity

ner equity on the failure and bankruptcy of companie

tive and analytical method to complete this study. Th

ssing references and other relevant studies. In term

eld survey and used the tool of questionnaire for col

yze them statistically to validate the study hypothe

s of accountants in Amman, academics and researc

rs as well as the boards of directors of Jordanian shar

e random sample with a rate fitting the total commun

d number of the questionnaires is (100). Two questi

98.

urces for allocating the required resources that are

iterature review such as books, articles and results of

ich helped the researcher in getting the theoretical sci

that have been allocated by a field study and a questi

f the study.

tool after reviewing the theoretical part and previoart: includes the general features of the study sampl

onal variables (gender, age, scientific qualification,

cludes the questionnaire paragraphs which aims to

ems of Owner equity specially the measurement of re

sed on Likert scale so that the answers on the paragr

eutral, disagree, disagree at all) and where the weigh

alysis respectively.

rts; the first involves the personal characteristics of

b title, while the second includes 58 items to measure

variables as follows:

www.iiste.org

ect between Owner

t between having a

effect between the

oing-Concern of a

effect between the

e and bankruptcy of

oing-Concern of a

orting standard on

of the accounting

of the accounting

e study has adapted

of the descriptive

lecting information

ses and answer its

ers in the field of

holding companies.

ity of the study that

onnaires have been

previous studies in

entific material.

onnaire designed to

s study to measurein the light of the

years of previous

hich extent do the

erves.

phs of the measure

s ( 54321 ) are

he subject: gender,

the variables of the


4/22


ISSN 2222-1697 (Paper) ISSN 2222-

Vol.4, No.5, 2013

Items (1 to 10) involve the measure

involve the measurement of the vari

variable of accounting information qfinancial reporting standard on Own

multiplicity of the accounting measu

the measurement of the variable of th

7.Statistical Methods Used :

For the purposes of statistical analysi

the analytical process by using SPSS

1. The recurrent distributions and per

2. Average and standard deviation to l

3. Testing reliability for variables tool

4. Simple regression coefficient to

independent variables.

7.1Study Tool Validity and Reliabil

To consider the validity of the stu

variables to a number of faculty mem

been added in the light of their recom

reliability coefficients and measure t

was 92.4% that is an excellent rate

variables of the questionnaire indivi

explains that:

Table (1) reli

reliability coefficient

70.33

80.80

73.6

71.5

79.9

74.8

8. Previous Studies1- Qashlan, Basil Fahd and Shadash

the financial statements of the Jordani

The study aimed at analyzing the ef

Jordanian commercial banks for the

using the fair value and those whic

accordance with IAS (39) over the s

Owner equity of those banks. The t

Jordanian commercial banks for the r

unting

847 (Online)

163

ent of the variable of the Goning-Concern of the bus

able of Owner equity, items (21-28) involve the

ality, items (29-36) involve the measurement of ther equity, items (37-49) involve the measurement o

ement methods of items of Owner equity, and the it

failure and bankruptcy of companies.

and study hypotheses, the descriptive analysis metho

or allocating the following:

entages for describing the characteristics of the study

earn about the trends of the subjects answers.

coefficients.

test the moral influential relationship between

ity:

y tool, the researchers introduced the phrases incl

ers in the Jordanian universities and specialists. Som

mendations. Moreover, the items of the questionnaire

e internal consistency of the study tool using (Cron

for being more than 60%. As for the reliability coe

dually, they all were accepted for being greater th

bility coefficients for the variables of the study

variableGoing-Concern of the entity

Owner equity

Quality of Accounting Information

Financial reporting Standard to Owner e

A M.M for items of Owner equity

Failure and Bankruptcy of Companies

Hussam Ad-dean, 2011 (Effect of Applying the fai

an commercial banks in the light of the global financi

ect of applying the fair value on incomes and the

years of 2006-2009. The two researchers compared

h were calculated under the historical value of the

tudy period and analyzing thereof based on their ef

o researchers analyzed the variable of income and

esults published by using the fair value in the light of

www.iiste.org

ness, items (11-20)

easurement of the

ariable of having athe variable of the

em (50-58) involve

d has been used for

sample.

he dependent and

uded by the study

e amendments have

were subject to test

ach's alpha) which

fficients for all the

an 60%. Table (1)

uity

value approach on

al crisis).

wner equity of the

he financial results

financial assets in

fect on income and

wner equity of the

the world financial


5/22


ISSN 2222-1697 (Paper) ISSN 2222-

Vol.4, No.5, 2013

crisis via comparing the results of th

and 2009 which are the period of the

fair value reflect the real economic sito reflect the appropriate value of the

the effects of the financial crisis on th

that applying the fair value on the

impact on the performance of banks

based on appropriate statements refle

2- (Nour, Nasser, Alakeca, Zahir an

global financial crisis: causes , conse

external decision makers (investors)

crisis of confidence on financial rep

stand in the way of addressing those

those barriers. The study found a nu

investors about the vulnerability of tfailures of the international compani

causes of the confidence crisis was t

important recommendations of the

investments especially the confidenc

appointing members of that govern

determining standards measuring th

market activity.

3-(Abbad, Munir, 2004) (the impact o

The purpose of this study was to sho

is debt used to increase profits of a co

Stock Exchange between 1991 - 2000

between the profitability of a compan

are. This was because of the fact tha

investments of a company or compa

making profits. Also, the study concl

debts and increasing the value of a co

4-(CAHIT ADAOGLU, MEZIANE

of Bonus Distributions in an Inflation

stock dividends, referred to as bonu

equity reserves, mainly the inflation

unchanged. In the absence of cash su

the announcement dates, particularl

firms. We relate our results to the pamitigate the impact of inflation on t

paid-in-capital ratio, and to increase

external equity financing. Although

hypotheses, we find no support for t

hypotheses observed in other markets

5-( Khan ,Allah Bakhsh , Shah, Sye

on Future Profitability and Stock Ret

of earnings with the view to predict

been undertaken to find out existen

earnings as well as their sustainabilit

Retained cash flows.

unting

847 (Online)

164

years of 2006, 2007 (pre-global financial crisis) wit

crisis. The results of the study showed that applying t

uation for a business as it is in the history of preparientity assets and applying the accounting of the fair v

e financial statements so that they showed the truth.

inancial statements of the Jordanian commercial b

administrations in taking good economic measure

ting the reality.

Alakeca, 2011), (the crisis of confidence on finan

uences and solutions) This study aimed at exploring

nd internal ones (departments of companies) on reas

rting after the global financial crisis and identifyin

easons as well as finally finding appropriate ways or

ber of results of which the most highlighted result

e local market by the global financial crisis and theies. The most important obstacle standing in the wa

at everyone pursued the policy of reservation and no

study were: finding a clear electronic govern

e crisis of financial reporting in the light of the glo

ent who should be experienced in the different fiel

transparency of financial reporting taking into acc

f capital structure on the value and profitability of co

how managers make decisions on the structure of ca

mpany or to increase its value (industrial companies l

). The study concluded that there was a statistically n

y and the structure of capital meaning the more debts

t the cost of debts is higher than profits generated b

nies should use self financing for their investments

ded that there was a statistically positive relationship

pany.

ASFER Why 2011 ) , Do Companies Pay Stock D

ary Environment) , We assess the market valuation of

s distributions, which are carried out by transferrin

revaluation equity reserves, to paid-in capital leavi

bstitution and transaction cost effects, we find positi

for the financially weak firms, suchas the non-ca

id-in capital hypothesis under which firms opt for boeir eroding paid-in capital, to reduce their leverage

heir credibility and borrowing capacity in a market

our results are also consistent with the retained ear

he attention-getting, and a weak support for the liq

Zulfiqar Ali 2012 ) , ( The Impact of Retained and

rns in Pakistan ) , This paper discusses the effect of

uture profitability of firms and stock returns in Paki

e of some pattern i.e. persistence among different

y over the period, for future profitability and stock r

www.iiste.org

h the years of 2008

e accounting of the

g the financial listsalue is what reflects

he study concluded

nks had a positive

ents and decisions

ial reporting in the

he point of view of

ns that generated a

the obstacles that

solutions to reduce

as: the concern of

r concern about theof addressing the

t risking. The most

ent for protecting

bal financial crisis,

ds of economy and

ount the degree of

panies).

pital that is to mean

isted at the Amman

egative relationship

are, the less profits

using them in the

where that is more

between increasing

ividends? The Case

an unusual form of

the accumulated

ng the total equity

e excess returns on

sh-dividend-paying

nus distributions todefined as debt-to-

of limited access to

ings and signaling

idity Enhancement

istributed Earnings

arious components

tan. This study has

components of the

eturns ,Conclusion


6/22


ISSN 2222-1697 (Paper) ISSN 2222-

Vol.4, No.5, 2013

Current accruals and distribution to

current accruals and cash distributio

correct that impact of all the componproved that impact of components of

the previous studies in that persisten

equal in respect of predicting the f

components of earnings and stock ret

8.1 Previous Studies Assessment:

The researcher have noticed that man

untraded assets or EPS , how they

structuring a capital or the item of he

of that on the decisions of investors.

and showing their effect on the Gonin

9.Theoretical Framework

Owner equity Concept:

We can say that Owner equity concep

a project and any changes thereto duri

of liabilities. So the value of Owner e

invest money in a project, the valuati

equity. When the results of process

determines the amount of the net inco

They are known as International Acc

classified as equity. (Arab Society of

The registration of equity data is diffean institution, a company or a joint st

1. In an institution owned by a pers

Owner equity.

2. In companies owned by two peopl

an independent owner under the name

3. In joint-stock companies, stockhol

shown in the budget of equity for ea

include a great number of stockholder

A business should also represent the

equity: Arab Society of Certified Acc

A. for each class of shared capital.

1. The number of authorized shares.

2. The number of shares issued and fu

3. Par value per share, or that the shar

4. Identical to the number of unpaid s

5. Rights, privileges and restrictions

and repayment of capital.

6. Shares of project owned by the proj

7. Shares reserved for issuance under

B. A description of the nature and pur

Statement of changes in equity:

A statement shows the changes that h

additions and contributions from the

unting

847 (Online)

165

equity holders have significant impact on the net in

s to debt holders have insignificant impact on the n

ents of the retained earnings on the future profitabilitdistributed earnings is not identical. The findings of

ce of components of retained earnings and distribut

ture profitability. No significant relationship has b

rns,

studies concentrated on one item of Owner equity s

an be divided and the effect of that on the decisio

ld earnings and the way of managing earnings and m

his study, however, tries to concentrate on Owner eq

g-Concern of a business and its ability to face future l

t refers to contributions of owners of funds at the beg

ng the life of the project or the rest of the assets after

quity depends on evaluating assets and liabilities. W

on of these assets is determined by the amount added

es are summarized, the increase in the value of a

me added to rights of owners.

unting Standards (Owners): They are the owners of fi

Certified Accountants (Jordan) , 2011, p 379).

rent in budget according to the legal form of a compack company as follows:

n, the capital of the owner of an entity is registered

e or more, equity is registered as an amount of mone

of the rights of partners.

ers' equity term is used and it is one of owner's equit

ch stockholder especially in the case of large joint st

s.

following in the list of the financial centre or in t

ountants (Jordan), 2011, p 393)

lly outspoken, and the number of shares issued but no

es have no par value.

ares at the beginning and end of the period.

on that category, including restrictions on the distri

ect itself, its subsidiaries or its affiliates.

options and sales contracts, including terms and amou

pose of each reserve within owners' equity.

ave occurred in each item of equity during the previo

wners.

www.iiste.org

ome where as non

et income. It is not

is equal. It is alsohe study support to

ed earnings are not

een found between

ch as re-estimating

s of investors and

easuring the impact

ity as a whole with

abilities.

inning of the life of

excluding the value

en property owners

or raised to Owner

ssets is that which

nancial instruments

ny and whether it is

under the name of

for each owner as

. It is unusual to be

ock companies that

e list of change of

t fully paid.

ution of dividends

nts.

us financial period,


7/22


ISSN 2222-1697 (Paper) ISSN 2222-

Vol.4, No.5, 2013

The property must display a statemen

1. Total comprehensive income for

company and the non-controlling sha1. For each item in equity has the effe

2. For each item in equity, matching

disclosure for changes resulting from:

A - Profit and loss for the period.

B - Each item of other comprehensive

C - Transactions with owners in their

- Contributions of owners and their di

- Changes in equity in subsidiaries th

- It should also disclose the total am

relevant amount per share whether in

Holt G, 2011, p 25)

9.1Hypothesis of Equity Going-CoAccording to this hypothesis it is

statements of general purposes are

administration had intended the liqui

the Going-Concern hypothesis is app

that the entity will be able to realize

the entity.

That means that it is expected for th

the use of the historical cost basis ca

since there will be no basis for the cl

33)

Classification of items of Owner equi

Shareholders' equity (equity) represe

cumulative results from operations an

Owner equity usually include the foll

1 - Core capital: This includes the n

displayed either in the heart of the bu

A stock is defined as a "negotiable in

representing his right in the company'

formation in joint-stock companies, d

Capital is divided into:

A - Authorized capital: It is the capit

and must be covered during the two y

B - Subscribed capital: It is the capi

divides to shareholders ordinary shar

because ordinary shares are the basisbe established without ordinary shar

shares.

T - Extra capital: It is the increase in

result of increasing the value of th

increasing the value of the company f

Concepts of Capital Preservation:

Capital represents the main item in s

Therefore, accounting seeks maintain

or dividends of the invested capital is

(Matar, Mohammed, Sweiti, Moses, 2

unting

847 (Online)

166

of changes in equity with showing what follows in t

the period with the total amount attributable to o

es separately.cts of retroactive application that is recognized accord

the value recorded at the beginning and end of the p

income.

capacity as owners, showing the following separately:

stributions.

t do not lead to loss of control.

ount of dividends as a distribution to owners during

the statement of changes in equity or in the notes. (Mi

cern:assumed an entity will continue in the future ind

repared in accordance with the Going-Concern hy

dation of a company or halting its operational activit

opriate that means that assets and liabilities will be r

assets and get rid of obligations within the normal c

entity a long lifespan. In the absence of verificatio

nnot be justified, and there is no need for depreciati

ssification of assets and liabilities (Nasser, Nur, Ibrah

y:

t the value of what the project owners have of assets

d past events (Abu Nassar, Mohammed, Fri, Hmeidat,

wing items:

ominal value of the ordinary shares and preference

get or in the notes.

trument issued by a joint stock company and given to

s capital stock, whereas shares are the main financing

espite the fact that a shareholder participates in a busi

al that the company announces for when the registrat

ears of the establishment of the company.

al actually paid, which is subscribed by shareholder

es are of the most important tools in present capital

for capital formation where it is not possible for a jois but it is possible that this company will continue

the financial value of the new shares subscribed for

company's financial share in the financial market

inancially

areholders' equity, and is a major guarantee for the ri

the value of the capital from falling since the basic r

not recognized in only after recovering or maintainin

012, p 168).

www.iiste.org

is statement:

ners of the parent

ing to IAS 8.

eriod with separate

the period and the

rza Abbas, Graham

efinitely. Financial

othesis only if an

y. When the use of

corded on the basis

urse of business of

of this hypothesis,

n and amortization

im, Nazmi, 2011, p

which show the net

2013, p 39)

shares that must be

a shareholder

tool for capital

ess risk."

ion of the company

s and founders and

markets and that is

t stock company towithout preference

nominal value as a

and as a result of

hts of creditors.

le states that profit

g their value.


8/22


ISSN 2222-1697 (Paper) ISSN 2222-

Vol.4, No.5, 2013

The conceptual framework also show

materialist concept where most of the

2009, p 285).Financial concept: assets - liabilities

Materialist concept: is the operation

machines.

The capital structure theories propos

capital structure. Ones of the most i

2004, p 23): are

1 - Rate of fixed assets: - the greater

these assets are useful as a collateral

behaviors of management and reduc

words, a loan plays a monitoring role

2 - Tax impact: - if debt financing giv

depend on it more, as long as it is abl3 - Size: - characterized by large co

work and geographical distribution , t

to bankruptcy).

4 - Growth: - companies that have a

where they have many chances of i

selection of a project which presents

projects on the basis of personal ben

than rely on long-term loans to reduc

5-Profitability : if companies with a

keep with a proportion of retained ear

to rely on its own resources to financ

between profits and borrowing).

9.1Reserves:

Definition: they are the amounts de

institution or an application of provis

Hence, reserve is a distribution of

profits and losses. According to the

indicate amounts booked from net pro

Khalid, 2004, p 172)

Reserves are one of the items equi

company of any emergency caused b

reserve is each amount held in net

realizing certain goals (such as supp(Al-shamaa, 1999).

Characteristics of reserves:

The characteristics of the reserves are

1 They function to calculate the dis

2 They are deducted from net profit

3 - Their utility returns to shareholde

4 They are accumulated year after y

5 Their position is in the balance sh

considered a protective shield to the c

unting

847 (Online)

167

the existence of two concepts of capital; a financial

facilities follow the financial concept of capital. (Riy

net assets created

al capacity of an entity of daily production units or

d a number of factors that will affect the combinati

portant of these factors (Abbad, Munir, Master, Y

the rate of fixed assets, it is easy to get a loan to ex

for loans. These assets also play a vital role in restric

e management's ability to take advantage of many

in this area.

es a company a tax exemption, it is expected that a

to achieve gains from it.mpanies are characterized with being more diversifi

herefore they are less likely to risk (less prone to fina

igh proportion of growth are more prone to the probl

vestment opportunities and here the role of manag

enefits to shareholders especially and society in gene

efits since these companies can rely on short-term lo

the problem of authorization.

igh proportion of profits distribute dividends to shar

nings. Based on the theory of funding prioritizing, a c

e its new projects rather than relying on borrowing (

ucted from the net profit for a particular purpose o

ons Companies Act. (Abdullah, Khalid, 2011, p: 398

rofits and losses on the contrary of a custom of w

merican Institute of Chartered Accountants, the ter

fits to meet specific purposes or to achieve specific o

y that appear in the credit side of a budget and th

external circumstances not expected by a company

rofits for purposes that not are allocated and this

rting the financial position of project financing obli

as follows:

ribution of profits.

s that they are subject to income tax.

s.

ear if they are periodical undistributble.

eet and therefore they constitute a source of financing

ompany's capital.

www.iiste.org

concept and the

dh, Abdullah,

operating hours of

n of the company's

armouk University,

and projects where

ing the actions and

rivileges. In other

ompany will

ed of the nature of

cial crises that lead

em of authorization

ment comes in the

ral and not to select

an financing rather

eholders, they must

ompany is expected

nverse relationship

goal sought by an

)

ich is a burden on

reserve is used to

jectives. (Abdullah

ey are to protect a

which means that a

is for meeting or

ations repayment).

the company and is


9/22


ISSN 2222-1697 (Paper) ISSN 2222-

Vol.4, No.5, 2013

6 - The possibility of investment res

joint-stock companies or purchase o

issued by public institutions with a g

Reserves are configured when an in

institution it is obliged to deduct a

converting it to different accounts of

This action is to calculate the distribu

tax to the credit side of it. However,

defined by the laws of each country,

directors of a company (within the la

of the paid and registered capital) to s

The remaining balance goes into the

Reserve with all its kinds ;legal andprofits of a company's and with certai

so that when calculating net profit

remuneration , research dedicated ,de

companies and the balance of the rest

Reserves are in order to meet extr

circumstances, therefore, it is necessa

the losses or expenses or use them in

be used only to compensate for a sho

their exposure to unforeseen dangers.

reserve as it is in the Jordanian firms

9.1.1Types of reserves: the types of

1 - General Reserve:

The general reserve is in order to stre

with any unusual circumstances. The

funds accumulated from the general r

thus it supports its financial positio

expansions. On the other hand, the

maintain the distribution usual rates

available for distribution to sharehold

formation is to strengthen the financi

2- Capital reserve:

The capital reserve consists of reven

company or as a result of processes roperations relating to the sale of som

re-evaluation of fixed assets or com

revenues have the nature of capital e

result of its ordinary action. The sa

fixed at less than their face value as i

and therefore the capital reserve con

company's ordinary profits (Abdullah

3- Reserve of Expansions and Reno

Companies resort to format of a rese

assets for the expansion of the compa

expanding aims. It is noted that the

being used it to purchase assets nec

unting

847 (Online)

168

erves as a bills payment reserve investment to purch

ther government bonds such as development bonds

vernment bail.

stitution wins at the end of the fiscal year, if this i

certain percentage of the profits after deducting th

eserves.

tion of profits and losses so that net profits are relaye

in the side of debit, different reserves are within a

s well as deductions for research , development , re

) and any proposed dividends from the rest of the p

hareholders.

ew year and appears in the budget within equi

andatory and optional and risk reserve is an immedin proportions governed by laws and regulations appli

after tax the remainder is distributed, including r

elopment and distribution of profits to shareholders i

of the recycled profits for the next year.

ordinary losses that might a company face as a r

ry not to use legal reserves in non-purpose, for examp

the conduct of distributions to shareholders. Legal re

tfall which may take place to some of the company's

Laws may state for the formation of other reserves

law.

reserves can be as follows: -

gthen the financial position of a company and make

general reserve is based on the approval of the Gen

eserve represent an internal source of funding intern

n. A company can use the general reserve to cope

general reserve can be used to make distributions

nd in that the general reserve differs from the legal r

ers despite the fact that they share the point is that the

l position of a company.

es that caused by actions that are not related to the

elated to fixed assets or liabilities. For example, profixed assets as a result of indispensable or a decisio

pensations collected by a company for fame or for

rning and do not fall within ordinary profits realized

e, there may be revenues resulting from payment o

t is the case when a company purchases its bonds at

ists of revenues relating to capital operations and do

, Khaled, 2011).

ations:

ve to meet necessary expenses for the purchase of s

ny's business and resort to borrowing or increase capi

eserve of expansions go to the general reserve if it

essary for expansions a company deems necessary.

www.iiste.org

ase some shares of

or purchase bonds

nstitution is a PSC

tax due on it and

after deducting the

certain percentage

arding the board of

rofits (a percentage

ate cut from annualable in any country

eserves , directors'

n the case of public

sult of unforeseen

le to cover some of

serve, however, can

assets as a result of

other than the legal

t more able to cope

ral Assembly and t

l to a company and

with a loss or for

to shareholders to

serve, which is not

primary purpose of

ormal activity for a

its may result fromof replacing or the

a brand. All these

by a company as a

certain obligations

ess than face value

not fall within the

me fixed or traded

tal to implement its

has a balance after

The deportation of


10/22


ISSN 2222-1697 (Paper) ISSN 2222-

Vol.4, No.5, 2013

balance in this case to the general re

purpose.

4 - Reserve of Re-bondsThe reserve of re-bonds is to provid

The composition of this reserve ens

addition to the benefits of such bonds

5 Reserve of Re-estimate:

It is the amount of the increase or de

increase or decrease in its market val

at fair values or what is known as gai

6 - Secret Reserve

Secret reserves take place as a result

budget with a rate that is less than the

Researchers believe that the definitio

to strengthen the financial position oconditions.

A - These reserves should be actual a

a separate item at the bank.

B - These reserves should represent r

C - The main objective of reserves

financial failure.

Retained profits: they are the gross

dividends to shareholders. An establi

deducting taxes. For example, net pr

profits to reinvest in a business awa

these can lead to reduce the cost

shareholders value in the entity and

capital and this is what leads to incre

institutions tend to hold a part of the

some assets and sometimes to increa

reduce the risk of short-term (Naimi

Treasury Stocks: treasury stocks are

shares of a facility for their shares an

Some items of comprehensive incom

fair value of financial investments p

financial statements of a foreign fac

tangible and intangible assets.

Uncontrolled Rights (minority rights)of a company before completing its

summarized when (preparing of fina

item).

Income concept: an income represen

the increase or decrease as is reserve

statement. Accounting income and e

and economists since time immemori

more accurate and correct, but canno

use of fair value in all accounting me

of the lack of active markets, especial

unting

847 (Online)

169

serve is due to the fact that the reserve of expansio

funds necessary to take action to the value of bon

ures bondholders access to the value of their bond

.

crease in the value of the tangible assets of a compa

e or the passage of time and the estimation of its val

s and losses of tenure.

f a management use of means leading to show shareh

real value and the means that lead to the existence o

of reserves should be as follows: amounts held from

the company in cash and used when needed accordi

d outstanding in the statement of financial position

al profits of an entity.

is to maintain the Goning-Concern of facilities an

profit accumulated since the establishment of an

shment often has several alternatives for the spendi

fits may be distributed to shareholders or book a pa

from the desire of shareholders to obtain profits. H

f funds, which the establishment needs. This als

hereby increase the shareholders and may be conve

se its value through the market value of the new share

net profits for the purpose of conducting some expan

e the proportion of liquidity in the hands of the com

t al 2011).

one of the components of Owner equity and repr

shown subtracted from the cost of purchasing Owne

: that appear within the Owner equity, such as the ne

repared for sale , the profit and loss not realized

ility prepared in foreign currency and the reserves

: they are the rest of remains owners of a subsidiarysale; a minority share in the net assets of an entity

cial statements of a unit within the item of Owner

s one of the most important items that affect all Ow

s are calculated and retained earnings based on the r

onomic income represent a point of disagreement b

al and we accountants agree with economists that the

be measured for many reasons as the economic inc

asurements and this is impossible from our point of

ly for fixed assets. For example, the accounting inco

www.iiste.org

s has exhausted its

s in their maturity.

s at due dates s in

ny as a result of an

ue or re-calculating

olders' equity in the

secret reserves.

a company's profits

ng to the following

f a company and in

the prevention of

ntity without cash

g net income after

t or all of these net

owever, reinvesting

leads to increase

ted after a while to

s issued. Generally

sions or purchasing

any if necessary to

sent buying issued

r equity.

t change in reduced

hen translating the

of re-estimation of

or old shareholdersand this account is

quity in a separate

er equity either by

esult of the income

etween accountants

conomic income is

me depends on the

iew due to the fact

e is measured as it


11/22


ISSN 2222-1697 (Paper) ISSN 2222-

Vol.4, No.5, 2013

is known with the mechanisms used

about the change of Owner equity tha

assets at beginning period provided tinto account. One of the most import

personal use of estimates in a wide

goodwill and internal cost of human

defects are inability (reliable measure

Capital components (according to the

1 - Capital adequacy ratio according t

Basel Committee revised a consolid

capital concept with a way that is mo

on the other hand that are of 8%, tha

accepted that the assessment of the s

extent that they meet this standard,

quality and the adequacy of the reserComponents of Capital and in acco

Capital consists of the two tranch

supplementary capital with no more t

It is not also allowed for the inclusi

allocated reserves, nor also it is allo

estate or buildings owned by banks o

exceed much cash cost.

Decisions stipulated that supplement

item of indebtedness to others may n

The capital adequacy is determined a

Capitals division into two groups or

A - Core capital includes shareholder

profits.

B - Supplementary capital includes u

loans + medium-and long-term lendi

after a period).

The following conditions must be res

- Supplementary capital may not be

- The percentage of loans that a b

framework, 50% of core capital.

- Revaluation of reserves of assets

subject of this difference to the tax u

be repaid after the rights of depositor- In order to accept any confidenti

regulatory authorities and to be throu

states do not allow this.

Reserve: a sum of the net profits h

purposes or achieving certain goals (

repayment) why all of them are confi

From the previous definition of res

reasons:

1. Strengthening the financial positio

2. Helping in the implementation o

reserves, reserve of increasing prices

unting

847 (Online)

170

now by accountants whereas the economic income i

t is by comparing net assets of an entity at the end of

hat they are measured at fair value to take inflationant defects of the accounting income is its reliance o

range of issues and not being able to measure ce

resources. Some of the most important defects of th

ment mechanisms) to measure all the items at fair val

Basel Committee (1) :

o Basel Principle:

ated capital adequacy that it put a minimum of the r

e comprehensive from the one hand and between the

is with giving the right to any state to be more strin

lvency of banks in the field of international transacti

on which credit risk focused. it also means the nee

es to be configured.dance with the decisions of the Basel Committee:

es; the first represents core capital and the sec

an 100% of core capital.

on of entire reserves and allowances for doubtful d

ed for the inclusion of the difference arising from th

that are invested and which are subject and of which

ry capital may not be more than 100% of core capital

t be more than 50% of supplementary capital.

cording to the following considerations:

two tranches:

' equity + reserves declared and legal reserves + undi

disclosed reserves + reserves of assets revaluation +

g for shareholders + securities (stocks and bonds co

ected in the capital:

ore than core capital.

ank gets from shareholders may not exceed and t

hall be subject to certain considerations (55% disc

on the sale of assets), as well as securities that conv

and shareholders).l reserves within the capital base of support to b

gh the profit and loss account and do not have a cust

ld for purposes other than for which the dedicated

such as supporting the project's financial position, fi

ured.

rves, it is clear to us that the reserve is configure

of an entity (such as the legal reserve and general re

certain administrative policy (such as the renovati

of fixed assets).

www.iiste.org

measured to learn

the period with net

factors or recessionhistorical cost and

tain items such as

e economic income

ue.

lationship between

ssets and liabilities

gent. It has become

ons is linked to the

d to focus on asset

nd represents the

bts within retained

revaluation of real

their market values

at maximum and an

tributed or retained

eserves against bad

nverted into equity

at fall within this

ount for a possible

rt into equity (shall

e approved by the

m recipe and some

is and that are for

ancing obligations

for the following

serve).

ns and expansions


12/22


ISSN 2222-1697 (Paper) ISSN 2222-

Vol.4, No.5, 2013

3. Reserved used for emergency purp

3. Reserves designed to help a state i

The researchers believe that the stainternational financial institutions (co

what has been applied to a type of p

from bankruptcy and financial distres

of the rest of the economic establish

researchers also believe that the de

applicable on all types of businesses,

and financial distress during the glob

Basel Committee evidence and a g

protecting the national economy.

Accounting measurement for booki

economy:That the process of remanding a rese

liquidity and thus increase inflation.

companies from expansion more tha

threatens the stability of those comp

crises and that is mainly due to to th

liquidity that can be solved by holdin

their estimated surplus cash at expans

increasing the proportion of financial

absolutely and but that can be chec

amounts.

9.2Financial reporting standard for

Researchers believe that it is necessa

to be a mentor and guide to all acc

estimates when preparing financial st

restrictions and conditions on the boa

indebtedness.

The purpose of the reserve must be

core capital at the beginning of the pr

shortfall in the value of tangible asset

result of use.

The financial reporting standard fo

expansions and renovations and shoul

instead of increasing indebtedness of

A set of conditions must be develope

A The rate of working capital (rolli

B - Reserves with all divisions

capital.

C - Reserves and retained earnings sh

D- Reserves shall not be rotated for

as it is stated of the Jordanian law of

E - Debt obligations of a company to

The researchers believe that the main

company and to cover the shortcomi

faltering companies and being bankr

the company in general but not being

unting

847 (Online)

171

ses or when needed to protect companies from finan

the implementation of the economic development pl

dards of the Basel Committee (1 + 2 + 3) focusemmercial banking sector) despite being public joint s

blic shareholding s must be applied to other compa

s in terms of the adequacy of capital and did not foc

ents even though they constitute a single integrated

cisions of the Basel Committee and its decisions

especially since these decisions helped protect ban

al financial crisis (2008 - 2012). These decisions ar

ide for the application of corporate governance in

g reserves and amounts of cash earnings and the i

ve with amounts of cash invested with a bank helps

n the other hand, the detention of these amounts als

n their actual size which means they do not rely o

anies and then their bankruptcy, as it happened in

eir inability to cover current expenditure, which is

g reserves and profits, especially when those compan

ions and renovations, with increasing rates of loss in

stumble that those profits and reserves are still amo

ked out after a period of time where those estima

Owner equity:

y to develop a specific standard of financial reportin

ountants, to limit the interpretations of accountants

atements and final accounts, to prevent manipulation

rds of those facilities when estimating to borrow or i

specified. Traditionally, the process of booking res

oject life , to meet the rise in the prices of goods and s

s and to facilitate the process of replacing at the end

Owner equity must state that the reserve is used

d be intended to increase capital at a company's need

a company, as is the situation now.

on all the items of Owner equity as follows:

g) to fixed capital should not be more than 50%.

and retained earnings should not be more than 100

ould be capitalized when they are already held.

ore than five years, while profits shall not be recycle

firms this matter shall be controlled by these compani

the authorized capital shall not be more than100%.

objective of holding reserves is to strengthen the fin

g in cash to cover future liabilities of the company.

pt is that the reserves represent the increase in the v

held already in a bank. The question that the study rai

www.iiste.org

ial distress.

an.

on protecting theock companies and

ies to protect them

s on the protection

economic unit. The

and conditions are

s from bankruptcy

considered by the

Jordan effectively

mpact on the total

to increase rates of

o lead to rein those

borrowing which

he global financial

ainly a problem of

ies resort to exploit

those facilities and

nts of discretionary

es turn into actual

g for Owner equity

and their personal

and develop a set of

crease a company's

rves is to maintain

ervices, to meet the

f its useful life as a

for the purpose of

for additional funds

of the authorized

d for only two years

es.

ancial position of a

he main reason for

lue of the assets of

ses is how an entity


13/22


ISSN 2222-1697 (Paper) ISSN 2222-

Vol.4, No.5, 2013

declares bankruptcy wand has large a

does not exceed tens of thousands thr

shareholding companies losses in extiEconomically, a state holds cash to

future liabilities of imports or dema

economies of these countries instea

global economic collapse for rates of

face problems of financial difficulty

process of developing a standard fina

determining the proportion of debt to

to the authorized capital still need mo

particular countries.

10.Study Framework

1. Gender

Table (2) the distribution

It is clear from Table (2) that the bigg

1) The Scientific Degree:Table (3) the ans

Scientific D

Diplom

Bachelo

Higher Stu

Total

It is noticeable from table (3) that the

people who have a Bachelor degree is

furthermore 50% have a PhD.

2) Experience: (practicing accountiTable (

Experien

Less than 1

Less than 5

(5-less thanMore than

Total

It is noticeable from Table (

36% their experience reache

years.

unting

847 (Online)

172

ounts of reserves, while monetary in the statement

ough the analysis and study of the annual reports of t

nguishing their losses in the optional or obligatory aceet with the Central Bank to cover its currency cas

nd for global currencies. When linking those curre

of the gold role , the world faced problems and e

local currency as it is in the private sector as the ma

due to the lack of holding those reserves and reta

ncial reporting for Owner equity and reservations wit

capital and determining the percentage of reserves a

re research and study to show the impact of that on t

Results Analysis and Testing Hypothesis

nalyzing Functional and Personal Characteristics

f the answers of subjects of the research sample ab

er percentage of the study sample were males and the

ers of the research sample about the scientific degree

PercentageRepetitiongree

4.1%4

63.3%62r

32.7%32ies

100%98

percentage of people who have a Diploma is 4.1%, in

%63.3, and thepercentage of people who have a Hig

g as a profession)

) the study samples answers about the Experience V

PercentageRepetitione

6.1%6ear

36.7%36ears

28.6%2810)28.6%2810

100%98

) that the percentage of people who got less than 1 ye

from a year to less than 5 years, but all the rest of pe

www.iiste.org

f financial position

e Jordanian public

count.and face financial

ncies in 1970 with

conomic crises and

ority of companies

ined earnings. The

h amounts of cash ,

d retained earnings

e total economy of

out gender variable

ir percentage is 77.6

variable

addition the percentage of

er Degrees is 32.7%;

riable

ar experience is 6.1%, and

rcentage is more than 5


14/22


ISSN 2222-1697 (Paper) ISSN 2222-

Vol.4, No.5, 2013

3) The specialized in companieTable (5) the study

specialized

compan

experien

Less than 1

Less than 5

(5-less than

More than

Total

It is clear from Table (5) thatpeople who got an experienc

than 10), and the rest is more

4) Job Title:Table

Job Titl

Accounta

Financial Ma

Auditor

Other

Total

It is clear from table (6) that the perce

and the percentage of Auditors is 18.4

The analysis of the answers of the stu

The analysis of the answers of the stu

The Standard Deviation and the mean

study variables:

unting

847 (Online)

173

Experience:

samples answers about the specialized in company e

Percentage

Repetitionin

e

18.4%18ear

38.8%38ears

18.4%1810)

24.5%2410

100%98

the percentage of people who got less than 1 year exe between (1-5) years is 38.8%, the people who have

than 10 years.

6) the study samples answers about Job title a var

Job TitleRepetition

30.6% 30t

22.4%22ager

18.4%18

28.6%28

100%98

ntage of Accountant is 30.6%, the percentage of Fina

% and the rest work in other jobs.

dy sample about the study variables:

dy sample about the continuation of the institution:

both have been extracting to describe the answers of

www.iiste.org

perience

erience is 18.4% , then experience of (5- less

iable:

cial Managers is 22.4%,

he study sample about the


15/22


ISSN 2222-1697 (Paper) ISSN 2222-

Vol.4, No.5, 2013

Table (6) the Mean and the standard

S

The bussinsse continually for instit

Some institutions do not depend

The management of the institution s

companys mortgagee an

There is a positive relationship bet

Goi

The project continuation depe

The effect of the funding proble

There is no legitimate that may guar

the

There is a negative relationshipcontinuatio

The continuation is estimated whi

management in providing the re

The historical coast concept is the m

c

It is clear from Table (7) that the a

institution variety came more than the

Analysis of the study samples answe

Table (8) that clarifies the averages o

the measuring tool (3) which means t

S

Some projects do not depend on Ow

Some institutions use the reserves to

Measuring the level of reserves and r

p

The main reason to lose in any comp

debts o

The financial year do changes on t

yearly retained profits according to

without coRecycling the profits for more tha

Jordanian

There is a negative relationship bet

capital fo

It is differ to disclosure the Owner

according t

There are no clear legitimates wh

reserves and the conditions that mus

There is disagree in between the ben

owners as considered that the Own

unting

847 (Online)

174

deviation of the study samples answers about the co

entence M

uation could be determine by the Auditor 3.7

on self finance in operating its activities 4.1

ome time intervene in the decisions of the

their trust in its Going-Concern 3.8

een the current assets and the institution

g-Concern3.9

nd on the fund of the project owners 3.5

s on the continuation of the institution 4.0

ntee the continuation and the protection of

institution3.6

etween the percentage of debts and theof the institution

3.9

h depend on the successful of the project

quired funds for its different activities4.0

st related concept in the continuation of the

ompany3.8

verage of the study samples answers for each text

average of measuring tool (3) which means that their

s about the properties rights:

the study samples answers for each text of the Own

at their attitudes were positive.

ntence Standa

deviati

er equity in funding its activities and inner

rowth.8492

end the losses retained from previous years .8281

etained profits which enhance the financial

osition.6858

ny is not determining a maximum limit for

n the capital.8765

e averages of the optional reserve or the

the percentages of the yearly earrings and

nditions for that

.9599

2 years is something contradict with the

companies law.9831

een the percentage of debts and the fixed

r the institution.8934

equity in clarifying the financial position

its legal position.7386

ch determine how to shape the types of

t be provided with the accounting solution

for it

.9252

fits of the institution and the benefit of the

er equity is a requirement for the owners.8035

www.iiste.org

tinuation of the institution

an Standarddeviation

755 .86788

020 .68096

571 .81228

388 .82257

306 1.07650

204 .89649

939 .93509

787 .84215

816 .80812

163 1.00869

of the continuation of the

attitudes were positive.

r equitycame more than

rd

onMean

3.9796

3.8776

4.0612

3.8776

3.8367

3.7917

3.7083

3.9583

3.8333

4.1667


16/22


ISSN 2222-1697 (Paper) ISSN 2222-

Vol.4, No.5, 2013

Analyzing the study sample answers

Table (9) clarify the averages of the s

which came more than the ave

Sen

The degree of the quality of the acco

possibility of the in

The verity of the accounting measuri

accounting

Provide the financial statement acco

the decis

The degree of information reliability

OwneMeasuring the propriety rights accor

of reliability as appropria

Understanding data and closing finan

and facilitate

Using a united accounting ways fo

credibility for the com

The accounting measuring with the

the quality of the accounting inform

real

Table (10) standard deviation and

29-The need for a private fin

facilitate the work of account

30- Accounting standards un

facilitate the process of discl

31-Using of standard financi

credibility and confidence to

future investors.

32-There is clear accounting

of retained profits to the aut

conditions.

33 - The accounting standar

guide and mentor to all acco

financial statements and easi

34- Finding of accounting sta

standards and U.S. accounti

and academics also difficult t

35- There are no in accounti

the conditions which to be m

out to a loss of the company.

unting

847 (Online)

175

bout the quality of the accounting information:

udy sample answers for each text about the quality of

rage of the measuring tool (3) that means that their att

Table (9):

tence Standar

deviatio

nting information is an evidence of the

stitution continuation.68793

g effects proudly on the quality of the

information.70958

rding to the relevance historic cost for

on makers.79361

epend on the right measuring of all the

r equity .60263ing to its historic cost limit the degree

te data and limit its realism.68793

cial coast raise the degree of its quality

the comparison.75829

r all the Owner equity like trust and

panys data to investors.79472

at fair value is a process that effect on

ation and the degree of reliability as a

data

.92314

ean for sample answers about financial standard

The term

Standa

deviati

ncial reporting for Owner equity to

ants and auditors also unites them.0.6840

fication process and raise quality

sure and comparison between institutes.0.7418

l reporting of Owner equity Make

the company's data to current and .7574

standard defines the percentage reserves

orized capital and capitalization .8615

s and financial reporting standards

ntants in order to consolidate the

y comparable at the international level.

.6621

ndards and financial reporting

g standards disperses work accountants

o compliance it.

3.571

g standards for the use of reserves and

t for capitalization or when to put them 3.612

www.iiste.org

the accounting information

itudes were positive

Mean

4.2292

3.9583

3.9583

4.1250

3.8958

4.1875

4.0000

3.8958

or Owner equity.d

nmean

4 4.1633

8 4.1633

4.1250

4.0000

4.1224

.1.03545

.85714


17/22


ISSN 2222-1697 (Paper) ISSN 2222-

Vol.4, No.5, 2013

36-No clear accounting stand

earnings and their purpose a

accounting treatment and co

Analysis of the sample answers a

Table (11) that shows the average ans

methods variable was more than the a

positive..

Table (11) standard deviation and

for Owner equity

37- Entrance of the historical

on assuming the stability of t

38-Different methods of acc

measurement bias.

39- The multiplicity of accou

flexibility leads to heterogen

40- The process of accountin

institutions or fair value at s

differences in the results froof profitability this making c

difficult to compare.

41- historical cost gives basis,

interpretations and precision

42- the accounting measure

accounting information and

43-determinants of income a

or loss have been according t

the measurement reliability

44-the accounting measuring

problems like the variety of

do accounting measuring

45- the international standar

the different Items of the fina

46-abortable the adoption o

financial crises

47- the degree of quality and

statement for the facilities at

measurement methods for th

48-the reserved and retained

the cash basis

unting

847 (Online)

176

The term

Standa

deviati

ards known reserves and retained

d how to spend or capitalized or

ditions.

3.612

out multi- methods of measurement accounting v

wers of the sample for each paragraphs of multiple ac

verage of measurement tool (3) which indicates that t

ean for sample answers about multiple accountin

The Itemsmean

cost in accounting measurement based

e unit of measurement.4.081

unting measurement leads to accounting3.857

ting measurement methods and its

ity of the financial position paragraphs3.854

measurement with historical cost in

milar institutions have lead to

one project to another, and the degreempare process difficult , making it

4.040

sufficient flexibility for personal

in accounting measurement.3.833

ent process affect on the quality of

he degree of reliability.3.775

a result of the project work of the profit

o the accrual basis and therefore affect

wner equity.

3.857

for the Owner equity face many

ays of measuring and the person who 4.020

s determined many ways for measuring

ncial statement4.040

fair value was a reason in the global3.750

the appropriate of the issued financial

the balance of the different

e assets

3.857

profits should be measured according to3.693

www.iiste.org

d

nmean

.96999

riable for items of Owner

equity.

counting measurement

eir attitudes were

measurement methods

Standard

deviation

.85763

.83728

1.02576

.75871

.85430

.93644

.81228

.74584

.70226

.80786

.81228

.93509


18/22


ISSN 2222-1697 (Paper) ISSN 2222-

Vol.4, No.5, 2013

49 if the person who do the a

a bias in the accounting mea

Analysis of the subjects' responses of

Table (12) shows the average answer

items of Owner equity are greater tha

Table (12) shows means and stand

bankruptcy a to all items of Owner eq

MeanStandard

Deviation

3.8163 1.04878 50-in ac

3.8571 .83728

51-

rese

com

4.1224 .8527152-

depe

4.1020 .7664353

impa

3.9592 .7587154-.

cont

3.8571 .8372855-

dete

com

3.8163 .82920

56-

lead

in th

3.6531 .89790

57-

cont

abili

3.8163 .8537058-

com

We note from the above tables thattheir arithmetic averages are great

standard deviation for each of the s

variable quality of information is th

unting

847 (Online)

177

The Itemsmean

counting measuring differ that leads to

urement3.755

the research on the variable of faltering and bankrupt

s of the sample for each variable of faltering corpora

the average of the tool measurement indicating that

rd deviation of the sample about the variable of

uity

Item

o you think reserves and retained earnings shoulcordance with cash basis.

The reason for faltering many companies lies b

ves and retained earnings depend on the result

rehensive income, according to an accrual basis.

here is a direct correlation between the risk to a

dence on financing by borrowing.

he item of property represented by manageme

ct on determining capitals structure.

Economic problems expected to occur we

mporary accounting problems.

The absence of legislation with Jordanianmining the ratio of debt to capital contributes

anies

he process of capitalization of reserves according

to decrease a project's capital under conditions o

e long term.

The process of capitalization of reserves and

ibute to the bankruptcy of many entities and

y for Going-Concern.

The high rate of foreign debt leads to a faltering

anies.

rends of the sample were positive towards all the var than the average of tool measurement (3). Table

udy variables, all of which were greater than the m

most agreed upon variable since its arithmetic avera

www.iiste.org

Standard

deviation

1.04597

cy of companies

tions and bankruptcy to all

the trends were positive

faltering corporations and

d be measured only

hind the fact that

of the statement of

acility faces and its

t has a significant

e not linked to

Companies Lawto faltering many

to the accrual basis

economic inflation

retained earnings

ives doubt in their

and bankruptcy of

iables of the study because(13) shows the mean and

asurement tool (3) and the

ing was (4.0312).


19/22


ISSN 2222-1697 (Paper) ISSN 2222-

Vol.4, No.5, 2013

Table (13) shows th

Analyzing the results of the test of h

First hypothesis

Ho: there is no effect significant stat

Ha: there is an effect significant stat

Table (14) shows the result

H0 resRR

2

reject0.6570.431

Independent variable: Owner equit

The test of the analysis of a simple r

value (t= 8.528) is greater than the ta

value is less than the tabulated value

value, therefore we reject the null h

effect significant statistically relatio

assured by the value of the correlat

explained (0.431) of the change in th

Ho: there is no effect significant stati

equity and the quality of accounting i

Ha: there is an effect significant stati

equity and the quality of accounting i

Table (15) shows the results of testi

H0 resRR

2

rejecte0.4580.209

unting

847 (Online)

178

mean and standard deviation for each of the stud

eanStandard

Deviation

Variable

.8769 .44036 Goning-Concern

.9020 .51792 Equity

.0312 .38857Information

Quality

.9224 .44657

Accounting

reporting

Standard

.8798 .47608Measurement

Methods

.8889 .49331

Failure and

Bankruptcy of

Companies

ypotheses

istically relationship between equity and the Going-C

stically relationship between equity and the Going-C

of testing the analysis of a simple regression for t

T calculatet Tabulatedt SIGlt

8.5281.9847000.

y

gression has been used. By reviewing the table (14),

ulated value. Once the decision base accepts the null

nd rejects the null hypothesis if the calculated value

pothesis and accept the alternative hypothesis. This

ship between equity and the Going-Concern of th

ion coefficient which is )0.657( . The independent

dependent variable, the Going-Concern of an entity.

stically relationship between the existence of a standa

formation.

tically relationship between the existence of a standa

formation.

g the analysis of a simple regression for the secon

T calculatet Tabulatedt SIGlt

4.991.98470.000

www.iiste.org

variables

oncern of the company.

ncern of the company.

e first hypothesis

Independent

variable:d

Goning-Concern ofEntity

we find that the calculated

hypothesis if the calculated

s greater than the tabulated

means that that there is an

e company which is good

ariable of, Owner equity,

rd of financial reporting on

rd of financial reporting on

hypothesis

Independent

variable:d

Existence of a

standard of financial

reporting on equity


20/22


ISSN 2222-1697 (Paper) ISSN 2222-

Vol.4, No.5, 2013

Adopted variable: the quality of ac

The test of a simple regression has b

4.99) is greater than the tabulated vvalue is less than the tabulated value

tabulated value, therefore we reject t

that there is an effect significant st

reporting on equity and the quality of

coefficient is )0.458( . The independe

the quality of information, explained

information.

11.Results and Recommendations

11.1Results:

First: The study showed that there is

the company which was good but n

Going-Concern of the company butthere are other factors not addressed i

Secound : The study showed that th

reporting on Owner equity and the q

which gives us an indication that ha

with the quality of accounting infor

information.

11.2Recommendations:

According to the foresaid results the

1 - The need to develop an financial

various items and specific definition

capital or total equity at a minimum o

2 Working on the fact that repre

financing for the company actually a

protect entities from bankruptcy or fi

3 - The need to develop text linked to

and the methods of using them.

5 A proposal to amend the Com

management by shareholders as well

6 - The need to unify the accounting

Going-Concern of facilities and prote

7 - The application of the Basel (I + II

liquidation and bankruptcy especiall

gives more confidence to creditors.

adequacy.8 - Encouraging the efforts of acade

countries to get to standards applied

References

1- Abu Nassar Mohammed, Hfor the Theoretical and Scien

2- Abdullah, Riadh, Jajawi Tal3- Pazel Conventions (1,2,3) Is4- The Arab Compound for L

Financial Reports, 2 part, 20

unting

847 (Online)

179

ounting information.

en used. By reviewing the table (15), we find that th

lue. Once the decision base accepts the null hypothand rejects the null hypothesis if the calculated val

he null hypothesis and accept the alternative hypoth

atistically relationship between the existence of a

accounting information which is medium since the v

t variable, the existence of a standard of financial re

(0.209) of the change in the dependent variable, the

a relationship impact between Owner equity and th

ot strong, suggesting that Owners equity have a re

does not represent the only factor that affects the G n the current study.

re is a relationship of statistically impact between

uality of accounting information which was mediu

ing a standard of financial reporting on Owner equit

ation but is not the only factor that affects the qu

esearchers recommend the following :

eporting standard on Owner equity, stating the acco

niversally for reserves and purpose and to determine

r maximum.

sents funds collected from the reserve represent a

d reserves and retained earnings should be held with

ancial distress.

the law of firms that shows a definition of reserves a

panies Act to allow the exercise of control over t

as determining the ratio of debt to owned capital.

methods of measurement for all items of Owner eq

cting them from financial bankruptcy.

I + II) to all kinds of companies to protect them from

involving the average of capital adequacy or its co

oreover, the government should be more stringent w

ics and researchers in unifying the standards of acco

y all countries.

medat Jumaa, Accounting Standards International

tific Aspect, Wael publishing house, Jordan, Amman

l, Accounting theory, Yazory publishing house, Jorda

ued 1998, 2011, Developing and Financing Magazin

egal Accountants, Jordan, the International Standar

11.

www.iiste.org

e calculated value (t=

esis if the calculatede is greater than the

esis. This means that

standard of financial

lue of the correlation

porting on equity and

quality of accounting

Going-Concern of

lationship with the

oing-Concern , but

standard financial

and not as strong,

has a relationship

ality of accounting

nting treatment for

the ratio of debt to

source of internal

amounts of cash to

d retained earnings

he performance of

ity to maintain the

financial distress or

ponents because it

th regard to capital

unting for different

inancial Reporting

2012.

n Amman (2009)

.

s for preparing the


21/22


ISSN 2222-1697 (Paper) ISSN 2222-

Vol.4, No.5, 2013

5- M.A Dissertation, Abbad,companies, Yarmouk Univer

6- Noaimi, Adnan, AlsaqisalaAdministration, Almaseerah7- Abdulnassir, Noor, the Trus

the Reasons and Resolution

Legal Accountants, 2011

8- Jaarah, Osama, Layeth Ali,Investment Decisions, the 9

2011

9- Abdullah, Khalid, The Comp10- Abdullah, Abdulqadeer, an

Corporate Industrial Compa

11- The Jordanian law of theJordan.

12- The Jordanian Companies L13- Qashlan, Basil, Khaddash, H

Financial Data for the Indus

Scientific Conference for the

14- Matar, Mohammed, Souati,Measuring, Displaying, and

15- Merza, Abbas and Holt Gi,preparation of the Financial

Foreign references :

1- 1-CAHIT ADAOGLU, MEStock Dividends? The Cas

Business Finance & Accoun

2- Cooper M.J., Gulen H., andStock retur

Date post:	14-Apr-2018
Category:	Documents
Upload:	ddadddaian
View:	213 times
Download:	0 times

Accounting Measurement of Owners’ Equity and its Impact on the Going-Concern of Companies

Documents