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Free Accounting Theory Online Course | ALISON

Study Unit 1: Nature of accounting theory, principles, accounting policy, practices and procedures
Study Unit 2 and 3: Statement of financial position and statement of profit or loss and other comprehensive income
Study Unit 4: The double entry system and the accounting process
Study Unit 5: Processing accounting data
Study Unit 6: Adjustments
Study Unit 7: Closing off procedure, determining profit and preparing financial statements
Study Unit 8: Cash and cash equivalents
Study Unit 9: Trade and other receivables
Study Unit 10: Inventory
Study Unit 11: Property, plant and equipment (PPE)
Study Unit 12: Other non-current assets
Study Unit 13: Current liabilities
Study Unit 14: Non-current liabilities
Study Unit 15: Financial Statements of a sole proprietorship
Study Unit 16: Non-Profit Entities
Study Unit 17: Incomplete Records.

Unformatted text preview: Accounting Theory Approach 1 THE NATURE OF ACCOUNTING THEORY APPROACH The primary objective of accounting theory is to provide a basis for the prediction and explanation of accounting behavior and events. No single comprehensive theory of accounting exists at present. 2 theory defined as:- a set of inter-related constructs (concept), definitions and propositions (suggestions) that present a systematic view of phenomena by specifying relations among variables with the purpose of explaining and predicting phenomena. 3 The General Acceptance of Accounting Principles (GAAP) guide the acctg profession to choose acctg techniques and prepare FS considered to be good acctg practice. The GAAP are subjected to the reexamination & critical analysis with regards to the changes in environments, values and information needs. 4 Changes in principles may occur as a result of providing solutions to emerging accounting problem and formulating a theoretical framework. Provide a rationale for what accountants do or expect to be doing . The process of theory construction should be completed by theory of verification or validation. 5 Machlup (1955) defined the process: The statement implies that the theory should be subject to a logical or empirical testing to verify its accuracy. If the theory is mathematically based , the verification should be predicted based on logical consistency. If the theory is based on the physical and social phenomena , the verification based on the deduced events & observations in the real world. 6 Therefore, acctg theory should result from both process of theory construction and verification. A given theory should explain and predict the acctg phenomena. If a given theory is unable to produce the expected results, it is replace by a better theory. 7 APPROACH IN ACCOUNTING THEORY 1 The Traditional Approach 2 The Regulatory Approach 3 The Positive Approach 4 The Behavioral Approach 5 The Paradigm Approach 8 Traditional approaches to accounting theory 1. Non-theoretical, practical or pragmatic (informal) 2. Theoretical: a. Deductive approach b. Inductive approach c. Ethical approach d. Sociological approach e. Economic approach 9 1. Non-theoretical approaches (P&A) The pragmatic approach: consists of the construction of a theory that conforms to real-world practices and suggests practical solutions Means that property which fits something to serve or facilitate its intended purposes usefulness to users & relevance for decision making 10 The authoritarian approach:...

Accounting and its objectives - Accounting Theory

  • CHAPTER1PART3 AccountingTheoryApproach 1 THENATUREOFACCOUNTINGTHEORY APPROACH Thepri
  • No single generally accepted theory has been created ..