Accounting Theory Summary

We have been concerned with an examination of the role of accounting theory in developing knowledge through the construction of theories. The importance of such theory construction for the improvement of accounting practice has also been discussed. The nature of theory was examined in detail in order to establish precisely the significance of theory to knowledge in general, and to accounting in particular. The several approaches to the development of accounting theory were reviewed. Attention was drawn to the successive stages beginning with descriptive theories, and proceeding to normative and to decision-making theories of accounting. We concluded with an introduction to a movement towards welfare-oriented theories of accounting, and a discussion of the role of those responsible for making accounting policies in using the insights produced by research and incorporated in theories of accounting.


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Read on: Accounting Policy Makers

Accounting policy makers

There are two main groups which determine accounting policy. First, the Government employs the legislative process to ensure that a minimum level of information is disclosed in company reports. It also acts as a spur to prompt the accountancy profession into action, where there is an apparent urgent need. An example of this influence was the establishment of the Sandilands Committee by the Government to consider the problem of accounting under conditions of price-level changes. Another example was the Employment Protection Act, 2014, which places a general duty on the... see: Accounting Policy Makers