Descriptive accounting theory. Accounting and its objectives 2022-10-30

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Descriptive accounting theory refers to the study of accounting practices as they exist in the real world. It is concerned with understanding and explaining how accounting practices are used and how they evolve over time.

One of the main goals of descriptive accounting theory is to provide a comprehensive and accurate representation of accounting practices as they are actually used. This involves examining the various accounting techniques, methods, and standards that are used by different organizations and industries. It also involves studying the ways in which these practices are influenced by external factors, such as regulatory requirements, economic conditions, and social and cultural norms.

One key aspect of descriptive accounting theory is the recognition that accounting practices are not fixed or universal, but rather are shaped by the specific needs and goals of the organizations that use them. For example, different industries may have distinct accounting practices that are tailored to their unique business models and operating environments.

In addition to understanding the diversity of accounting practices, descriptive accounting theory also seeks to identify common themes and patterns that may emerge across different contexts. This can help to identify best practices and provide guidance for practitioners on how to apply accounting principles in a consistent and effective manner.

Another important aspect of descriptive accounting theory is the role that it can play in informing policy and regulatory decisions. By providing a detailed and nuanced understanding of how accounting practices are actually used in the real world, it can help policymakers and regulators to craft more effective and realistic rules and standards that are better able to meet the needs of the organizations and industries they seek to regulate.

In conclusion, descriptive accounting theory is a critical field of study that plays a vital role in understanding and explaining the diverse and evolving world of accounting practices. It helps to provide a comprehensive and accurate representation of how accounting is used in the real world, and helps to inform policy and regulatory decisions in a way that is grounded in a deep understanding of the realities of accounting practices.

MCQs Accounting theory

descriptive accounting theory

Professional accountants are familiar with all the basic accounting theories and know how to make each work for the businesses they interact with. Accounting Theories are based on sound reasoning and therefore they are scientific. Accounting theory and Accounting Practices are absolutely closely related. So, this theory is advisory in nature. Increases the efficiency of Accountants Knowledge of rules and principles increases the efficiency of accountants. Hendrickson, accounting theory may be defined as logical reasoning in the form of a set of broad principles that provide a general frame of reference by which accounting practice can be evaluated and guide the development of new practices and procedures. Once a manager understands what and where items belong on a balance sheet, they will better understand the state that the business is in.

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What Are the Basic Accounting Theories?

descriptive accounting theory

A single process cannot be applicable to all cases. For these reasons accounting can be said to be a science. The prime objective is to moderate income variability over the years by shifting Premium Revenue Income statement Generally Accepted Accounting Principles. Specifically, measured income is used as a computed amount to accomplish objectives necessary for the operation of society- The sociological approach to the formulation of an accounting formulation theory has centralized to the evolution of a new accounting sub discipline, known as socioeconomic accounting. Flexibility Accounting theory is flexible to incorporate changes in the scenario. Descriptive Accounting Theory is formulated by inductive approach and it analyses the existing accounting practices.

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Accounting theory

descriptive accounting theory

It is conducted within the structure of gaap. The contractual arrangements Premium Financial statements International Financial Reporting Standards Scientific method accounting theory 3101AFE Accounting Theory and Practice Tutorial Questions for Tutorials 1- 6: Semester 2 2014 TUTORIAL 1 - Semester 2 2014 Deegan Topic 1: Introduction to financial accounting theory QUESTION 1 - Question 1. These theories do not generally vary and produce more or less similar results in most cases. It is essential now. Standards are issued by the Accounting Principles Board, a committee of the accounting professional bodies. Again, theories emerge out of constant observation, analysis, examination of the theoretical problems and procedures. Means that the particular study must have flaws in its design or execution in specifying and collecting the data C.

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Descriptive and Prescriptive Accounting Concepts

descriptive accounting theory

Huge Capital Requirement : As the business expanded due to technological improvement and large-scale production, etc. Evaluative accounting Theory: The theory which helps to know about the quality and quantity of any object or event or the qualitative quantity and quantitative quality is known as an evaluative accounting theory. We will examine each of these approaches in the following sections. It is also not subjected to manipulation. The specific amounts due to the business and their nature.

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Accounting Theory Chapter 2 childhealthpolicy.vumc.org

descriptive accounting theory

Ø To pre-calculate the effect of an event on future. It is also useful when logic is necessary for building up new models. In that case some practical events from reality are chosen and with those practical events imagination is mixed and mingled in such a manner so as to be represented as a new novel subject. The various persons and parties interested in the business, like, the Government, public, investors, Money-lenders, Researchers etc. Introduction Accounting is a subject that is guided with principles and regulations. More explicitly the choice of accounting techniques will depend on the particular economic situation.

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Basic

descriptive accounting theory

The descriptive pragmatic approach to accounting theory construction is an inductive approach — it is based on continual observation of the behavior of accountants in order to copy their accounting procedures and principles. Third, accounting employs rules of manipulation; techniques for the determination of profit may be considered as rules for the manipulation of accounting symbols. A level of knowledge sufficient to understand the financial reports properly C. However, due to a strange combination of circumstances, I was matriculated by Biology and Medical Engineering College, instead of the Economic and Management College, in which I could accumulate the knowledge that would allow me to realize my career ambition. Whatever kind of business you run, a thorough understanding of the many ways to look at your financial needs and a good grasp of accounting principles is imperative for both company owners and accountants to ensure that your fiscal future is safeguarded.

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Traditional Approaches to Accounting Formulation Theory

descriptive accounting theory

Normative accounting Theory: Normative accounting theory is of the type surmon in nature. Justified accounting practice Knowledge of accounting theory helps to justify existing accounting practices. This approach can be mainly divided as descriptive pragmatic approach and psychological pragmatic approach. This statement denotes: A. QUESTION 2 - Question 1. To furnish information regarding Purchases and Sales, both Cash and Credit. Income smoothing relies not on falsehoods and distortions but on the wide leeway existing in alternatively accepted accounting principles and their interpretations.

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Accounting Theory : Definition and Classification

descriptive accounting theory

Accounting Practices are considered as valid media for conveying various information to different interested parties. The purpose of the accounting formulation theory or the modified theory is to make the unexpected expected, to convert the anomalous occurrence into an expected and explained occurrence. This frame work has to get a practical relation with the applied portion of accounting or practical accounting. The practice of accounting is always guided and influenced by conventions, doctrines, and various other rules and methods which have been accepted by all. Because the authoritarian approach also attempts to provide practical solutions, it is easily identified with the pragmatic approach. To detect any defalcations and to check the frauds and misappropriations of money. So it is less dynamic.

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Descriptive accounting theory Free Essays

descriptive accounting theory

That is true C. A scheme or system of ideas or statements or propositions which has undergone extensive testing and is generally accepted to be the accurate explanation behind an observation C. Markets for information are not efficient and therefore produce a sub-optimum amount of information, given the problem of 'free riders'. Utility is cited as a main objective of accounting various writers in the literature, including Fremgen and Prince. Over the years, interest in this sub discipline has increased as a result of the social responsibility trend espoused by organizations, the government, and the public. It helps to build an approach towards accounting practices. According to the sociological approach, a given accounting principle or technique is evaluated for acceptance on the basis of its reporting effects on all groups in society Also implicit in this approach is the expectation that accounting data will be useful in making social welfare judgments.

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