This study is to analyse the financial accounting made by Larkin Motel.

One of the main

problem identified in this case study is the non-compliance with accounting rule and principle.

Among the accounting principle and rules that the motel does not comply are they did not use

accrual basis in recording their business transactions. Besides, they also do not follow the

matching principle stated in the International Financial Reporting Standards (IFRS). In

addition, Larkin Motel also does not follow rule that is underlying under Generally Accepted

Accounting Principle (GAAP) which is the need to record depreciation when the company have

assets in their business operations. There are some factors that causes the problems to occur

such as top management having difficulties in interpretation of accounting standards, lack of

sufficient accounting knowledge and awareness regarding accounting concepts and objectives

of financial reporting and shortage of professional and qualified accountant. Finally, some

alternatives solutions are provided for the problem such as hiring professional and certified

accountant to the company and top management need to undergo a formal business training.

All the alternative solutions given must fulfil the decision criteria decided which are cost

savings, easy to implement and the level of acceptability by top management. The best

recommended solution is hiring a professional and certified accountant to Larkin Motel.

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