Fnanacial Accounting History
CURRENT DEVELOPMENTS IN ACOOUNTING THOUGHT
ACC 518
Name: SHWETA NAGPAL
Student ID-11484151
Assessment 1
Due date: 26/08/2011
Q 1-Explain why theories need to be evaluated. Identify and justify the factors you would consider before deciding that a theory appears sound. Apply the factors you have identified to an accounting theory of your choice (e.g., Normative, Positive etc.).
There are various definitions of theory:
A coherent set of hypothetical, conceptual and pragmatic principles forming the general framework of reference for a field of inquiry’ (Hendriksen 1970)
A scheme or system of ideas or statements held as an explanation or account of a group of facts or phenomena’ (The Oxford English Dictionary)
There are many theories of financial accounting that is there is no universally accepted theory of accounting, or indeed, any universally agreed perspective of how accounting theories should be developed. This is because different researches have different perspective of the role of accounting theory and/or what the central objective, role and scope of financial accounting should be.. (Deegan, 2009, p. 7)
Why theories need to be Evaluated?
Early development of accounting theory Relied upon the process of induction, development of ideas or theories through observation
Normative accounting theories and Positive Accounting Theory represent two fundamentally different approaches to accounting theory.
Theory development—1960s and 1970s Known as the ‘normative period’ of accounting research
Theory development—mid to late 1970s Known as positive theories (Deegan, 2009, p. 7)
Normative Theory: In relation to the purpose of the theories, explained by (Abdullah, 2011) the purpose of Normative Accounting theories is to provide guidance for practitioners. Normative theorists identify the role of accounting (for example, the provision of information for investment decisions), the goal of firms (for example, to maximise profits), the characteristics
ACC 518
Name: SHWETA NAGPAL
Student ID-11484151
Assessment 1
Due date: 26/08/2011
Q 1-Explain why theories need to be evaluated. Identify and justify the factors you would consider before deciding that a theory appears sound. Apply the factors you have identified to an accounting theory of your choice (e.g., Normative, Positive etc.).
There are various definitions of theory:
A coherent set of hypothetical, conceptual and pragmatic principles forming the general framework of reference for a field of inquiry’ (Hendriksen 1970)
A scheme or system of ideas or statements held as an explanation or account of a group of facts or phenomena’ (The Oxford English Dictionary)
There are many theories of financial accounting that is there is no universally accepted theory of accounting, or indeed, any universally agreed perspective of how accounting theories should be developed. This is because different researches have different perspective of the role of accounting theory and/or what the central objective, role and scope of financial accounting should be.. (Deegan, 2009, p. 7)
Why theories need to be Evaluated?
Early development of accounting theory Relied upon the process of induction, development of ideas or theories through observation
Normative accounting theories and Positive Accounting Theory represent two fundamentally different approaches to accounting theory.
Theory development—1960s and 1970s Known as the ‘normative period’ of accounting research
Theory development—mid to late 1970s Known as positive theories (Deegan, 2009, p. 7)
Normative Theory: In relation to the purpose of the theories, explained by (Abdullah, 2011) the purpose of Normative Accounting theories is to provide guidance for practitioners. Normative theorists identify the role of accounting (for example, the provision of information for investment decisions), the goal of firms (for example, to maximise profits), the characteristics
References: Deegan, C. (2009). Financial accounting theory (3rd Ed.). McGraw-Hill Abdullah.S Deegan, C. (2009). fInancial accounting theory. mc graw.