Essay on Bus310 Accounting Theory and Accountability

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BUS310 ACCOUNTING THEORY AND ACCOUNTABILITY WORKSHOP 1 SOLUTIONS 1) GHHT: Chapter 1: Theory in Action 1.1 The article describes how a particular theoretical approach has been replaced by another. Explain why one theory replaces another, and who, or what, determines whether an existing theory survives. A theory is primarily meant to explain or predict an event, behaviour or outcome. Proponents of a theory look for evidence to support the theory. This evidence should be independently observed and consistent after repeated observations. Some theories are speculative or ideas or guesses floated to encourage researchers to undertake the observations required to prove or disprove the theory. The question often debated is what comes…show more content…
2. Does the reintroduction of a theory mean that it should not have been replaced in the first place? Theories about how the economy works and what will happen in the economy where there is monetary policy or fiscal policy intervention are appropriate in assisting policy-makers understand the possible implications of decisions they make or are under consideration. However, they are rarely complete models and often outcomes cannot be predicted. Reintroduction of a theory suggests that new evidence in support of the theory has been reported. 3. Should a theory be discarded if it does not specify the means of achieving a stated objective? Explain your answer. The theory itself doesn’t have to specify the means of achieving a stated objective; however, it has to provide a sound basis for explaining, defining and predicting behaviour. The application of the theory can have many elements and it is in the interpretation of what will induce the predicted effects in the economy predicted by the theory which will result in predicted or other stated outcomes. Q2) Readings 1. Principal images that have shaped the development of accounting theory: Historical record: One of the early objectives of historical cost accounting was stewardship. This meant that financial reports were a report on how well management had safeguarded the
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