7101AFE Financial Accounting Theory And Practice Essay

The conceptual framework is an attempt to provide a metatheoretical structure for financial accounting. SFAC No.3 defines 10 elements of financial statements. It is obviously a resolution of the definitions presented in the discussion mem for the conceptual framework project. Elements are what accounting professionals measure and the attributes is about how to measure. Definitions can be helpful to the financial statements which have been formulated in order to help professionals to specify the qualification are. Also, the definitions must be expressed in the metatheoretical structure.

The Financial Accounting Standards Board goes through an elaborate information gathering process before issuing their standards. Firstly, an issue is identified and placed on the Board 's agenda by the Emerging Issues Task Force. Secondly, a task force of knowledgeable persons is appointed to advise the Board on the issue. Thirdly, the Board 's technical staff investigates the issue. Fourthly, a discussion memorandum on the issue is then written and distributed to interested parties. Fifthly, the

When talking about accounting, the first thing we should know is the history of its development. Traditionally, the development is from inductive to deductive. Inductive theory assume what is done by the majority is the most appropriate practice. However, It did not seek to evaluate the logic or merit of

Firstly, it is crucial to acknowledge of the Positive Accounting Theory. According to Deegan & Samkin (n.d.), Positive Accounting Theory explains and predicts accounting practice and does not seek to determine particular actions. For instance, which accounting policies will be choosen by firms and how newly proposed accounting standard will be reacted to by firms (Deegan & Samkin n.d.). In the same report, the author claims the first aspect of Positive Accounting Theory, which is “Explanation” means providing reasons for observed practice. For example, positive accounting theory pursues to explain why historical cost accounting continues being used by firms and why convinced firms switch between a numbers of accounting techniques. The second factor, which is “Prediction” indicates that the theory predicts “unobserved phenomena” (Deegan & Samkin n.d.). The author clarifies that this phenomena is not necessarily a future phenomena, they

Financial accounting is a subjective area that strives to provide complete and accurate information for the end user. Before the class discussion, I felt accounting was more of a science than an art – if you tested items and they fell into a certain parameter, it was an accurate representation of the facts and figures under review. The class discussion and another person’s experience has caused me to rethink this perspective because when one considers the variables incorporated into financial accounting, it is not as simple and clear cut as some would like to think. Hines (1988, p. 252-253) states “having the full picture – a true, a fair view of something – depends on people deciding that they have the full picture. Sometimes, they later decide they did not have the

Another theory used in accounting is that of Materiality. This notion necessitates that accounting centers on material facts and not on facts that are immaterial to figuring revenues. Only transactions that have monetary

The Financial Accounting Standards Board is board of seven independent members who are accounting professionals that was developed in 1973. This seven member group is responsible for communicating the standards that are in place for financial accounting and reporting that takes place in the United States. Generally accepted accounting principles (GAAP) are the standards that are used by the FASB to govern the way in which corporations prepare their financial reports. This process of utilizing these standards to maintain and report accounting files is the only method that the US Securities and Exchange Commission will accept. The members include; Michael Crooch, CPA, George Batavick, CPA, Edward Trott, CPA, Leslie Seidman, CPA, Donald

Accounting’s Positivistic Tendencies: Overlaying a Social Science with Pure Scientific Rationale
Tutorial 5 - Week 6

A conceptual framework is a group of concepts that are broadly defined and systematically organized to provide a focus, a rationale, and a tool for the integration and interpretation of information (Mosby’s Medical Dictionary, 2009). Conceptual framework controls how things happen physically and do this in a way that is easy to remember and apply.

According to Oluwadare and Samy (2015) from the Canadian Social Science, Critical Accounting Theory is about understanding accounting in the context of its broad socio-politics, evaluating the accounting policies and practices that exist, and offering means of working towards more enabling accountings. It generally puts a focus on accounting’s role to keep those in control of particular resources in their positions while those without any capital to have their voices undermined or restricted. Critical theory advances beyond the rational view of the traditional functionalist in terms of accounting and accounting research. It aims to help in the disclosure of the accountability of organisations as well as increasing the environmental stability. This is theory is contextual, meaning it focuses more on political, economic and social consequences (Laughlin, 1999). It could be said that it is similar to corporate social responsibility, but it is actually beyond that as corporate social responsibility has a tendency to focus on the parties that can potentially be affected by the decisions of the firm, inadvertently ignoring minor parties, while Critical Accounting Theory wants to put the focus on society as a whole. In his research, Laughlin (1987) states that there are three relevant points of the critical theory for accounting research. Firstly, the critical accounting theory creates a link between theory and practice. Secondly, critique, change and

It has been become an issue of great concern that the accounting profession must find a common theory in order to address and put the issue at rest. This therefore, has called for the study of this topic under review “the demand for and supply of accounting theories: the market for excuses. As a result of this several questions have been raised. For instance, the question of why accounting theories are predominantly normative has been put forward by this article? Secondly, why no single theory in accounting profession that is generally or widely accepted? It has been argued that the financial accounting theories have been found to be ineffective most especially in the area of impacting accounting practice and policy, though, this has been

The Conceptual Framework of Accounting is like a constitution for financial reporting, providing the foundation for standards. The Conceptual Framework provides structure to the process of creating financial reporting standards and ensures that standards are based

Hey, hey, hey! Chapter 2 Conceptual Framework. Now this chapter has very little in the way of numbers so if you’re a true accountant who wants to get his visor out, maybe his arms bands, pocket protector, it might not be the chapter for you. But you better know this stuff. We’re going to see it time again cause the concepts we’re going to come back to them. We’re going to repeat them throughout this course in 312 you’ll see them come up a time again. So make sure you get this chapter down and we will refer back to these concepts. As we go through the course have fun!

Accounting as a technique means that accounting is use as a tool for influencing or altering person, object and activities with the view of changing the world. scholar’s starts to use accounting as a tool for measuring processes, event and activities in financial terms which automatically makes ways in which the activities of people is changed. since accounting have the ability to change activities it is applied to make things seemly real, by fabricating unbiased and neutral records like revenues, liabilities , assets , expenses to figure financial performance and financial place of organization which do not exist of itself, but accounting makes it look like they are independent of themselves. According to Hines social

Following correct Accounting procedure is an important factor for the success of an organization, specially in today’s competitive business environment the theoretical part of Accounting was taught elaborately by the instructor. The practical implementation of theory is also important. Alltex Industries Limited has expanded in last few years. To acquire particular knowledge and to supplement our theoretical study, this was included in course curriculum to orient with the present business world. It was an opportunity for us to compare the theory in the context of practical business environment.