Accounting Theory Construction The function to study accounting theories is to classify them according to the assumptions they rely on‚ how they were formulated‚ and their approaches to explaining and predicting actual events. There are some classification which are pragmatic‚ syntactic‚ semantic‚ normative‚ positive‚ and naturalistic approaches. Pragmatic approaches are based on observing the behavior of accountants or those who use the information generated by accountant. Syntactic approaches
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decision usefulness is an approach to financial reporting that recognizes individual responsibility for predicting future firm performance and that concentrates on providing useful information for this purpose. The approach assumes securities market efficiency‚ recognizing that the market will react to useful information from any source‚ including financial statements. An earning response coefficient measures the extent of security’s abnormal market return in response to the unexpected component of
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accountant is able to measure and chooses to measure…” (p. 480). Required: Discuss the extent to which the “scientific” world-view of mainstream accounting researchers‚ is grounded on a belief that “reality” exists independently of thee human subject and the possible implications this has for accounting theory development. Introduction Accounting is a subject that is guided with principles and regulations. Thus‚ it is often regarded as a rigid‚ rigorous‚ and highly analytical discipline with
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Introduction Accounting is a very old science as it is strictly related to the first forms of trade in the old world. According to Belkaoui (1992: 22)‚ the Committee on Terminology of American Institute of Certified Public Accountants (AICPA) defines accounting as follows: "Accounting is the art of recording‚ classifying and summarising in a significant manner and in terms of money‚ transactions and events which are in part at least‚ of a financial character‚ and interpreting the results thereof
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Patrick M. Wright College of Business Administration‚ University of Illinois at Chicago; Department of Economics‚ Rensselaer Polytechnic Institute; School of Industrial and Labor Relations‚ Cornell University We describe a variety of perspectives on corporate social responsibility (CSR)‚ which we use to develop a framework for consideration of the strategic implications of CSR. Based on this framework‚ we propose an agenda for additional theoretical and empirical research on CSR. We
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According to Robert K. Elliot‚ 1997‚ assurance is a positive declaration that produces quality information which enhances the degree of confidence for all intended users as well as improves the quality of decision that being made. It is also part of corporate governance which provide reliable and accurate information to the stakeholders such as investors‚ employees‚ government‚ voluntary sector and market regulators‚ regarding the efficiency and effectiveness of organization’s policies‚ strategies
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“The theories we use to help us understand standard-setting in national arenas (such as Australia) don’t work so well at the international level where the . . . International Accounting Standard Board (IASB) is taking a leading role. We will have to modify them or expand our theoretical repertoire” Discuss the above statement‚ clearly indicating your agreement or otherwise about the basis for your views. Abstract: The theories that are presented in this paper all assume the importance of a
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Positive Accounting Positive economic theory and accounting practices are objective and based on fact. Positive accounting focuses on analyzing the economic statistics and data at hand‚ and deriving conclusions based on those figures. For example‚ if corporate growth allows a company to increase shareholder dividends over previous dividend payments‚ positive accounting theory would conclude that corporate growth causes a rise in stockholder dividends. Most bookkeeping and data collection involved
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rejected. Some financers has started a debate about deceptive influence of EMH on traders. They are claiming that lack of risk amendments in the theory caused participants to have "chronic underestimation of the dangers of asset bubbles breaking" (Nocera‚ 2009) The purpose of this paper is to analyse impact of Efficient Market Hypothesis on Modern Financial Theory principles and practice and as the essence to highlight relativeness of this dependence. It is going to point major financial tools based on
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QUESTION 1 a. Outline the objective and the principles of a theory that prescribes fair value accounting. Fair value accounting is to measure selected assets at fair value. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. The objective of fair value accounting is linked with the objective of ‘decision usefulness’ of general purpose financial reporting. That is‚ to provide relevant information that
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