Employing Alternative Accounting Methods in Oil and Gas Company

The research problem stems from the fact that accounting organizations do not agree on a specific method for the purpose of organizing financial reports in the oil sector, so FASB requires oil and gas companies to use the Successful efforts method, while the SEC allows companies to use the Full Cost method.

So, this research aims to study the difference between the accounting methods used in the oil field, namely full cost method (FC) and successful efforts method (SE) in the context of financial reports in an oil company for the purpose of reviewing the pros and cons of the methods used on reported profits and their impact on users interested in financial data.

The main conclusion of this research can be the Successful Efforts method discloses the internal flaws and supports the investor in reaching reasonable investment decision, and the full cost method highlighted by proponents as the Full Cost methodology in the long run reveals more positive bottom-line results for the firm.