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Slide AKT 405 Teori Akuntansi 1 Godfrey
Slide AKT 405 Teori Akuntansi 1 Godfrey
HODGSON
HOLMES
TARCA
CHAPTER 1
INTRODUCTION
Overview of Accounting
Theory
What is a theory?
Hendriksens definition:
the coherent set of hypothetical,
conceptual and pragmatic principles
forming the general framework of
reference for a field of inquiry.
Overview of Accounting
Theory
What is an accounting theory?
Hendriksens definition:
logical reasoning in the form of a set of
broad principles that
provide a general framework of
reference by which accounting
practice can be evaluated and
guide the development of new
practices and procedures.
3
Overview of Accounting
Theory
Whether a theory is accepted
depends on how:
well it explains and predicts reality
well it is constructed both theoretically
and empirically
acceptable its implications are
Overview of Accounting
Theory
Overview of Accounting
Theory
The development of accounting
theory has been mostly unstructured
Chambers:
Accounting has frequently been
described as a body of practices which
have been developed in response to
practical needs rather than by
deliberate and systematic thinking.
Overview of Accounting
Theory
Was developed to resolve problems
as they arose reactive
Ad hoc approach
Led to inconsistencies in practice
e.g. different depreciation methods
Pre-theory (1400s
1800)
Goldberg:
No theory of accounting was devised from
the time of Pacioli down to the opening of
the nineteenth century.
Pragmatic accounting
(1800 1955)
The general scientific period
based on empirical observation of
practice
provided an explanation of accounting
practice
focused on the existing viewpoint of
accounting
Normative accounting
(1956-1970)
Sought to establish norms for the
best accounting practice
Focused on what should be (the
ideal) v. what is
10
Normative accounting
(1956-1970)
Degenerated into battles between
competing viewpoints
Two groups dominated:
conceptual framework proponents
critics of historical cost
11
Normative accounting
(1956-1970)
Factors prompting the demise of the
normative period include:
the unlikelihood of one particular
normative theory being generally
accepted
the application of financial economic
principles
the availability of empirical data and
new testing methods
12
Normative accounting
(1956-1970)
The major criticisms of normative
theories were:
they do not necessarily involve
empirical hypothesis testing
they are based on value judgements
13
14
15
16
17
Recent developments
Academic and professional developments
in accounting theory have tended to take
different approaches
Academic research focuses on capital
markets, agency theory and behavioural
aspects
The profession has sought a more
normative approach what accounting
practices should be adopted
19
Recent developments
20
Recent developments
Conceptual framework resurrected
in 1980s
states the nature and purpose of
financial reporting
Establishes criteria for deciding between
alternative accounting practices
SACs 14
21
Recent developments
Conceptual framework Recent
Developments
Joint project between IASB & FASB
International harmonisation of
accounting practices through a single
consistent set of international financial
reporting standards (IFRS)
22
Recent developments
The conceptual framework
underpinning the IFRS favours a
move toward
accounting practices that provide
information for enhancing decision
making by investors and others
recognising all gains and losses in the
accounting periods in which they occur
measurement using exit values
23
Content outline
Part 1: Accounting theory (chapters 1
3)
Part 2: Theory contributing to
practice (chapters 4 10)
Part 3: Accounting and research
(chapters 11 14)
24
Summary
Accounting theory
Major periods of accounting theory
development
Normative accounting
Positive accounting
Conceptual framework
IFRS
25
Theory
Accounting theory
Normative theory
Positive theory
Behavioural theory
Conceptual framework
IFRS
26