BKAF 3083 ACCOUNTING THEORY AND PRACTICE Individual Assignment 1 1. Explain 8 levels of conceptual framework Level | Elements | Explanation | 1.Border of discipline / authority | * Definition of financial reporting | It defines the financial record of the business activities. | 2. Subject | * Definition of the reporting entity | It defines the reporting entities where the users are dependent on their financial statements to make decision. | 3. Objective | * Objective | It is
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In traditional approach‚ the exact cost of products or services is probably impossible to determine. The use of direct labor as the activity base made sense when overhead cost allocation systems were first developed. At that time direct labor made up a large portion of total manufacturing cost. Therefore‚ it was widely accepted that there was a high correlation between direct labor and the incurrence of overhead cost. As a result‚ direct labor became the most popular basis for allocating overhead
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Development of A General Accounting Theory – A Scientific Approach? Accounting Theory Development can be defined as ‘a piecemeal process of trial and error in response to changing social and economic forces’. (Underdown and Taylor‚ 1985‚ p2). Therefore‚ it is clear that a general frame of reference is needed‚ however not one that would upset the ‘accounting system’. Accounting theory cannot be narrowed to a certain approach‚ which is the definitive article. In fact‚ accountancy is one
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A challenge to traditional management theory Ed Weymes Introduction Modern management theories are focussed on how individuals contribute to organisation and corporate performance while the performance of the chief executive is dictated by the organisation’s financial returns and share price. While organisations espouse the principles associated with total quality management‚ learning organisations‚ high performance organisations and implement balanced score cards‚ the chief executive’s primary
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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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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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always behave in accordance with the efficient market hypothesis‚ then should we reject the research that has embraced the EMH as a fundamental assumption? In this regard we can return to earlier chapters of this book in which we emphasised that theories are abstractions of reality. Capital markets are made of individuals and as such it would not (or perhaps‚ should not) be surprising to find that the market does not also act in the same predictable manner. Nevertheless‚ the EMH has helped provide
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efficient market if there is no inside information. That is‚ all information about the share is publicly available. The information approach to 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
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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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Prescriptive Theory and Descriptive Theory 3 Economic Theory 4 Decision Usefulness Theory 5 Critical Accounting Theory and Critical Theory 6 System-Oriented Theories 7 Open System Theories 8 Behavioral Decision Theory 9 Legitimacy Theory 10 Political Economy Theory 11 Institutional Theory 12 Stakeholder Theory 13 Agency Theory 14 Normative Theory 15 Public Interest Theory 16 Capture Theory 17 Economic Interest Theory/Private Interest Theory 17 Positive
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