Financial accounting theories in a real life Assignment - 1

Financial accounting theories in a real life - Assignment ExampleDifferent researchers have dissimilar views regarding financial accounting theories (McGraw-Hill, 2006). on that point are different types of accounting theories that tramp be implemented in real life scenario. maven of them is the Repo 105 theory. This theory is routined by many of the companies. Moreover, it needs to be mentioned that the misuse of such theories can result in negative functioning of the companies. There are many such cases where improper use of accounting theories result in complete demise of the companies. Financial regulations can play a major role in reducing such cases (Liu & Schaefer, 2011 Eisinger, 2012).The report intends to discuss the role of Repo 105 scheme in the enhanced performance and subsequent downfall of the Lehman Brothers. The report would further depict the different motives that encourage companies to verify their financial accounts with reference to a few well known cases. Moreover, the report also intends to illustrate the grandeur of financial regulations in reducing such cases.Repo 105 is an accounting trick where a company depicts a short-term loanword as a part of the sales of the company. Moreover, this loan would be further employ by the company to repay its liabilities. A repo agreement would include temporary transfer of assets from one fellowship to another which would also be accompanied by an agreement of repurchase of the same assets after a particular phase of time. After a certain period of time, the transferee returns the securities to the borrowers, which in turn repays the loan with a considerable interest. It needs to be mentioned that as a part of the exchange process, one troupe would receive securities as batten for the cash loaned, while the other party would receive cash guarantee for the securities loaned. It has been observed that these agreements are widely used as well as recognised as a legal means of