Informational functions of accruals and accounting principle adjustments


  • Antonio Carlos Coelho
  • Iran Siqueira Lima


This article presents a summary of the recent theoretical development on the economic and informational functions of accounting accruals and other adjustments referring to generally accepted accounting principles. It adopts a methodology that has a descriptive phenomenological character and reviews relevant research on the subject. It focuses on the economic functions of accruals in accounting. Accruals are discussed by using the positive approach’s conceptual framework for accounting; thus, managers choose to use this accounting technique as an instrument to manage the informational asymmetry between them and the users of the accounting data. The incentive for the employment of this recording instrument does not necessarily depend on norms or accounting principles, but is to be found in the institutional and environmental conditions of the economy. This orientation has been a research topic on the basis of the new institutional economy. The study indicates that the adjustments are made in order to reduce the random process of the cash flow series of companies, transforming it into earnings series; to make an opportunistic earnings management; and to timely anticipate the recording of probable economic losses.

Key words: accounting accrual, informational function of accounting, informational asymmetry, asymmetric anticipation of economic losses.