accounting theory
3101AFE
TUTORIAL 1 – Semester 1 2014
Deegan Topic 1
Introduction to financial accounting theory
1.1 What is the difference between a positive theory of accounting and a normative theory of accounting?
1.6 The IASB and the FASB are currently developing a revised conceptual framework of financial reporting. If you have been asked to review the framework—which is an example of a normative theory of accounting—why would it be important for you to pay particular attention to how the objective of financial reporting is defined within the framework?
1.8 What is the difference between developing a theory by induction and developing a theory by deduction?
1.9 Is the study of financial accounting theory a waste of time for accounting students? Explain your answer.
1.28 What do we mean when we say that ‘theories are abstractions of reality’? Do you agree that theories of accounting are necessarily abstractions of reality?
1.31 Would you reject as ‘insignificant and useless’ a positive theory of accounting on the basis that in a particular research study the results derived failed to support the hypotheses and the related theory? Explain your answer.
3101AFE
TUTORIAL 2 - Semester 1 2014
Deegan Topics 2 and 3
Name: Anum Mushtaq Khan
Student I.D: s2854249
Tutorial Time: Tuesday, 4-5p.m.
The financial reporting environment and The Regulation of financial accounting
2.1 What expectations do accounting standard-setters have about the accounting knowledge of financial statement readers?
Ans) Accounting standard-setters have an expectation that the readers of general purpose financial reports have a ‘reasonable knowledge’ of accounting. Specifically, the IASB Framework states that ‘users are expected to have a reasonable knowledge of business and economic activities and accounting and a willingness to study the information with reasonable diligence’. Hence, there is an expectation that financial statements are not tailored to meet
TUTORIAL 1 – Semester 1 2014
Deegan Topic 1
Introduction to financial accounting theory
1.1 What is the difference between a positive theory of accounting and a normative theory of accounting?
1.6 The IASB and the FASB are currently developing a revised conceptual framework of financial reporting. If you have been asked to review the framework—which is an example of a normative theory of accounting—why would it be important for you to pay particular attention to how the objective of financial reporting is defined within the framework?
1.8 What is the difference between developing a theory by induction and developing a theory by deduction?
1.9 Is the study of financial accounting theory a waste of time for accounting students? Explain your answer.
1.28 What do we mean when we say that ‘theories are abstractions of reality’? Do you agree that theories of accounting are necessarily abstractions of reality?
1.31 Would you reject as ‘insignificant and useless’ a positive theory of accounting on the basis that in a particular research study the results derived failed to support the hypotheses and the related theory? Explain your answer.
3101AFE
TUTORIAL 2 - Semester 1 2014
Deegan Topics 2 and 3
Name: Anum Mushtaq Khan
Student I.D: s2854249
Tutorial Time: Tuesday, 4-5p.m.
The financial reporting environment and The Regulation of financial accounting
2.1 What expectations do accounting standard-setters have about the accounting knowledge of financial statement readers?
Ans) Accounting standard-setters have an expectation that the readers of general purpose financial reports have a ‘reasonable knowledge’ of accounting. Specifically, the IASB Framework states that ‘users are expected to have a reasonable knowledge of business and economic activities and accounting and a willingness to study the information with reasonable diligence’. Hence, there is an expectation that financial statements are not tailored to meet