Objective of accounting theory pdf

We begin by briefly examining the relationship between accounting theory and the institutional structure of accounting. Accounting theories always try to explain with reason, the logic underlying a particular practice. The main object of accounting is to ascertain the results of the financial transactions of a. Pdf the role of accounting theory in the development of. For example, one of the co mmandments said to be at the base of. Different scholars and institutes have defined accounting differently. Hence, the approach adopted here is concerned with. One of the objectives of this book is to assess the influence of accounting theory on the rule making process. Forexample,normativetheoristssayhowweshouldclassifyacertain leaseandthenpositiviststestthisto seehow. Hence, the approach adopted here is concerned with the.

According to smith and ashburne, accounting is the science of recording and classifying business transactions and events, primarily of a financial character and the art of making. The approach to accounting theory presented is based primarily on deductive reasoning and logic starting with the basic objectives and postulates of financial reporting. This type of accounting theory is of descriptive approach. Other objectives are to explore accounting theory in resolving. The objectives of accounting in an accounting theory. The financial accounting standards board fasb issues generally accepted accounting principles gaap which aim to improve comparability. Theory as it applies to accounting is the coherent set of hypothetical, conceptual and pragmatic principles forming the general frame of reference for a. It will always be important for students to study accounting theory, and that relevant material is presented and discussed in an objective manner. In a practical sense, the main objective of financial accounting is to accurately prepare an organizations financial accounts for a specific period, otherwise known as financial statements. An introduction to accounting theory sage publications. Understand the meaning of accounting theory and why it is an important topic. Accounting theory may also be used to explain existing practices to. Understand the relationship between accounting theory and policy making. Accounting theory according to various authors including ijiri 1975, gaa 1988, ruland 1989 supports the concept that accounting standards should serve the information needs of users.

Other objectives are to explore accounting theory in resolving areas of diversities among users of financial statements. Objectives of accounting core accounting purpose and. Thus, when we speak of objective, we rationalise the thinking process to formulate a set of attainable goals, with reference to the. But the most important goal of accounting theory should be to provide a coherent set of logical principles that form the general frame of reference for the evaluation. It explains the causes and effects of the daytoday events of our life. An introduction to accounting theory learning objectives. Descriptive accounting theory helps us to predict how an event will be treated in accounting from the study of the explanations as to the happening of that particular event. Accounting theory and conceptual frameworks nanopdf. One of the objectives of this book is to assess the influence of accounting theory on the rulemaking process. Pdf accounting theory 7th edition isi11185927125381 vinda. Accounting theory is a set of assumptions and methodologies used in the study and application of financial reporting principles. An introduction to accounting theory learning objectives after reading this chapter, you should be able to. Understand what measurement is and its role in accounting.