Accounting is concerned together with the collection, research and conversation of economical information, which is often used to generate decisions and plans regarding business simply by various users. The Panel On Lingo of the American Institute of Certified Pubic Accountants described accounting as follows: “Accounting is a art of recording, classifying, and summarizing in a significant manner and terms pounds, transactions and events which can be, in earlier at least, of a monetary character and interpreting the results thereof”. (Ahmeo Riahi-Belkaou, page 32) Accounting is said to be a dialect used to communicate information to people. Accounting is additionally an perceptive discipline and a profession.

Place an order for research paper!

Database of essay examples, templates and tips for writing For only $9.90/page

Moreover, accounting can be socially created and used by persons for people, which usually influence workings and associations in culture. The history of accounting stretches back to if the first historical accounting program began, that has been originally depending on measurement and recording activities, and then the significant emergence of double-entry bookkeeping around the fifteenth century, as a basis for even more accounting expansion that as a result resulted in modern Ango-American accounting in the 20th century. While accounting was mainly an “internal matter” where the owners were near to the business, the growth of corporations led to the advantages of stewardship accounting.

As a result of additional industrial creation, changing interpersonal environment and establishment of professional accounting bodies, the accounting theory should systematically develop in accordance with importance of accounting in modern society. In recent years, a lot more theorists start to assess the nature of accounting theory along with argue whether there is an accounting theory or not really. In this composition, I am going to examination the definition of accounting theory and provide proof to ascertain the presence of a complete accounting theory.

A theory is defined as “a pair of interrelated constructs (concepts), definitions and selections that present a systematic perspective of trends by specifying relations amongst variables with the purpose of describing and forecasting the trends. “(Kerlinger, 1964, page 11) According to this definition, the statement “accounting as a self-control has no theory” implies that as a subject, accounting has no a coherent set of concepts and definitions to explain and predict the trends. Obviously, the subject of accounting commonly covers all of the phenomena in the scope of accounting. From this sense, the accounting theory refers to an over-all complete accounting theory the coherent pair of principles and concepts to describe and predict all the trends.

Before examine the nature of accounting theory, I want to know where theory originate from. “A important requirement of a theory structure is that it must come to terms with situations of knowledge”. (Mathews & Perera, 1996, page 52) Simply, the idea is coming from knowledge, the best question, ” how do we know what we know? ” such as, the principles of common sense. Correspondingly, certainly one of main attributes of a theory is a body system of knowledge. Study regarding knowledge is definitely the domain of epistemology, which can be concerned with the type and derivation of knowledge, the scope expertise and the dependability of promises to understanding.

Accounting can be social built and practiced by people and people in terms of its functions. Consequently, Know-how comes from people. In accounting, we want to make knowledge and theories of accounting support us to understand accounting better. But there were a big issue arose in accounting in relate to deficiency of a knowledge bottom.

In order to fix this problem, SSAP 2 being a first step to get a knowledge basic for accounting was released in1971, which usually defines accounting bases, accounting policies and fundamental accounting concepts including, going concern, prudence. Later on, more accounting standards were developed. Particularly, corporate record was released in 75 which discovered a number of user groups. Although different users normally require different data. The issues of pursuits of information and the inconsistent of accounting standards resulted in the development of a conceptual framework.

A great ASB statement of guidelines issued the qualitative attributes of financial information. Specifically, comparability assists the introduction of a conceptual framework which in turn tries to restrict the alternatives available to reporting bodies. “But the alternatives may not be totally reduced unless of course a conceptual framework produces the accounting standards on a completely logical basis”. (Mathews & Perera, 1996, web page 109)However, the limitation of your conceptual framework includes time and cost of preparation. Evidently, it is time consuming and pricey to operate. Particularly, some countries with limited economies perhaps have been hit by the recent economic climate and are unable it.

Furthermore, a conceptual framework supplies too much advice to accounting and encourages rigidity so that new suggestions cannot be easily introduced. In the event the conceptual construction is inadequately designed, it might only profit some of consumer groups. For instance , the Trueblood and SFAC 1 Information give insufficient recognition to the needs of user organizations other than traders and credit card companies. In addition , the conflict of principles continue to exists inside the conceptual structure. The illustrative principles are relevance and reliability inside the Statements of Principles.

Relevance was preferred at the beginning rather than prevalence of reliability later. Therefore , a uniform conceptual framework could possibly be difficult to accomplish on the basis of inconsistent developments therefore leading to the impossibility of a general logical accounting theory. On the other hand, Hendriken and Van Breda argue that an standard accounting theory about a coherent set of rules is possible at present. They specify accounting theory as ” a coherent set of hypothetical, conceptual, and pragmatic principles forming an over-all frame of reference pertaining to inquiring in the nature of accounting. ” (Hendriksen, Elizabeth.

S., 1977, page 1) The main aim of accounting theory is usually to provide a coherent set of logically derived principles that function as a body of reference point for assessing and expanding accounting practice. I firmly do not accept this statement, because there are a few evidences could prove that there is no such an accounting theory including a logical set of principles and principles. First of all, the earlier given model, conceptual construction, proved that it is difficult to obtain it for the completely coherent basis currently. For example , economic ratio research predicts the near future information are manufactured base upon past details. SSAP2 launched the principles of accrual and prudence which usually conflict with each other.

Specifically, the accruals concept may suggest research and development always be carried frontward but the advisable concept may require the costs to created off in today’s period. In addition, true and fair watch hasn’t been defined, although accountants are required to produce the accounts with true and fair perspective which will depend on their built reality, therefore it is problematical which it might be fair to you, but is not fair to somebody else. Furthermore, Image that shaped accounting theory tries to offer recommendations as to what accounting is all about or perhaps should be about. In Davis, Menon &Morgan’s article, 4 different images were created to influence the accounting theory in the several contexts reacting to changing social environment.

Specifically, accounting was presumed to be goal, as suggested by the picture of historical record. But in the past few years, new images have been created for accounting theory, which are current economic fact, the information system and product. Accountants right now believe that accounting is very subjective.

Hence, the subject and thing conflict with each other. We also have to see in what context each image can be presented apart from see it itself. For example , the population commodity image has emerged in the circumstance of a regulated environment.

Therefore , no one photo can fully capture the essential factors due to subjectivity and fresh images will be being designed to add new sizes to upcoming accounting hypotheses. Moreover, additional images which in turn Solomon and Tinker argument about were created for domination of theory and practice of accounting. Solomon, a traditionalist, supporters neutrality or objective as opposed to the view of Tony enhance, a radical thinker. Additionally , image that influences accounting theory could possibly be partial or perhaps one-side results from view of reality may be produced partly and somewhat one-sidedly.

In other words, accounting theorists created the several images by simply justifying their views of reality depending on observation of social phenomena. Accounting like a discipline has no a complete theory due to the not enough a logical set of principles and ideas in the scope of accounting and the changing social environment.

According to American Accounting Association’s Panel on principles and criteria, they concluded that no single governing theory of economic accounting is definitely rich enough to involve the full selection of user-environment technical specs effectively, hence, there exists in the financial accounting literature not only a theory of financial accounting but a collection of hypotheses which can be arrayed over the differences in user-environment technical specs. (American Accounting Association, 1977, page 1-2) It is indicated that no person single accounting theory relates to all the user-environments but an amount of theories may. For example , distinct users will need different details. Investors will need profit details and creditors are satisfied with cash flow information.

AAA’s bottom line proved once again that there is not any a complete standard accounting theory. In fact , currently no single accounting theory could affect all the user-environments because different users demand different data. We as well live in a complex and changing society to ensure that accounting theory only can perform its compliant objective in a single particular period, such as, picture.

No one accounting theory could also explain and predict all of the phenomena. Authentic and reasonable view is a myth, how do accountants practice with this kind of a view? A conceptual framework is still producing for aiming to achieve a finish general accounting theory.

Overall, I agree with this declaration “accounting being a discipline does not have theory”. I actually am from the opinion that in the subject of accounting, there is no an over-all complete accounting theory the industry coherent pair of principles and concepts to clarify and predict all the tendency. I have proven with some good examples that some of principles and concepts will be inconsistent, such as, relevance and reliability, and in addition it is noticeable that accounting theory is usually partial and one-side, just like, image, mainly because images that shaped accounting theory were captured through theorists’ distinct view which may be incomplete.

Changing sociable environments as well influence pictures. Clearly, each image simply emerges within a particular framework and period, as suggested by Davids. In addition , the incomplete of a conceptual framework which usually tries to create a coherent set of principles to explain the practice proved the a shortage of a general accounting theory. The whole poof firmly against the Hendriken and Van Breda’s view which a general accounting theory have emerged. However , a conceptual construction is still bettering so I individually believe that a whole general accounting theory could be achieved in the foreseeable future in accordance with the full of a conceptual framework because of the development of accounting in response while using development of their particular.

BIBLIOGRAPHY Ahmed Riahi-Belkaoui(2000) “Accounting Theory”, fourth Edition, Thomson Learning. Mathews & Perera (1996) “Accounting theory & development”, 3 rd Edition, Nelson. Underdown & Taylor (1985) “Accounting Theory & Insurance plan Making”, Heinemann.

< Prev post Next post >

Through Deaf Eyes Essay

The perspective I actually initially accomplished during the film was that, deaf people a new really hard lifestyle. They strived to become similar with the “hearing world, ” to not ...

Organizational Culture of Google Essay

Launch Sergey Brin and Lewis Page who had been PhD College students at Stanford University attained in 1996 and they created the idea of starting a search engine that they ...

Brief History Essay

Serbia, or what is formally named as the Islamic Republic of Usa, has a rich culture starting out since eight thousand B. C. (Ladjevardian doble. 2). The historic styles that ...

Importance of Understanding Cultural, Ethnic, and Gender Differences Essay

America is and definitely will continue to be a really diverse place. More than almost eight million legal immigrants found the U. S. between 1981 and 1990, and an undetermined ...

The Comfort Theory Essay

Ever since the last 100 years, nursing has becoming a professional discipline just like every other discipline, it requires several theories to steer it. It has been seen the fact ...

Various Culture And Their Distictive Ways Essay

Lifestyle is a unique way of life of men and women or teams. Culture can be manifested in all aspects of your life which include norms and beliefs such as ...

Game theory in online game market Essay

In Chinese video game market, you will find two normal price strategies, Charging and Free. The Charging means that the customers have to pay for the game. They need to ...

Belonging Essay Essay

Concept, perceptions and ways to belong or perhaps not to belong differ from individual to individual. This is due to experience that form ones character that come through personal, cultural, ...

Organizational Culture and Personal Values Essay

Job satisfaction and job efficiency are interrelated topics, that are derived from specific personal beliefs, (Iaffaldano & Muchinsky, 1985). Organizations can use specific processes to shape employee values, which will ...

Bradshaw’s Theory Essay

Bradshaw’s theory regarding the growth of children is very correct. When a child experiences discomfort and suffering at a young age they may become emotionally damaged. For example my personal ...

Category: Tradition,

Topic: Accounting theory, Essay, Theory,

Words: 1910

Published:

Views: 408

Download now
Latest Essay Samples