Approach to development of Accounting Theory

1. Pragmatic theories
Descriptive pragmatic approach
Approach based on continual observation of the behavior of accountants to
copy their procedures and principles. Focus in accountant behavior not on
attributes of firm.
-Criticism: Does not include analytical judgment of the quality of accountant
action. Does not provide accounting techniques and does not allow change.
Psychological pragmatic approach
Observe user response to accountants outputs
Reaction by user is taken as evidence that financial statement are useful
-Criticism: User may react illogically, not react when they should, have
preconditioned response
Syntactic and semantic theories
Normative theories
Concerned with policy recommendation & with what should be done and
how accounting should be practiced.
Based on subjective opinion of what should be report and best way.