Professional Documents
Culture Documents
Traditional
approaches to the
formulation of an
accounting theory
Traditional approaches to
accounting theory
• Non-theoretical approaches
• Deductive approach
• Inductive approach
• Ethical approach
• Sociological approach
• Economic approach
The nature of accounting:
various images
Accounting as:
– language
– historical record
– current economic reality
– information system
– commodity
– ideology
Accounting as an ideology
Accounting has been perceived as:
• a means of sustaining and legitimizing the current
social, economic and political arrangements:
– Karl Marx maintained that accounting
perpetuates a form of false consciousness and
mystifies or confuses rather than reveals the
true nature of social relationships
– accounting has been perceived as a myth,
symbol and ritual that permits the creation of a
symbolic order within which social agents can
interact
• an instrument of economic rationality and a tool
of the capitalistic system
Accounting as a language
• Accounting is perceived as the language
of business
• According to Hawes, a language has
two components, being symbols and
grammatical rules:
– numerals and words and debits and
credits are examples of the symbols
unique to accounting
– in accounting, grammatical rules refer
to the general set of procedures used
Accounting as a historical
record
• Accounting records provide a history of
the manager’s stewardship of the
owner’s resources
• Measurement of the stewardship
concept has evolved over time, in the
following periods:
– pure custodial period
– traditional custodial period
– asset-utilisation period
– open-ended period
Accounting as a historical
record, cont…
• Under these two stewardships: pure
custodial period & traditional custodial
period
– The agent is required to return the
resources intact by performing
minimal tasks
• Under Asset-utilization period: the agent
should provide initiative & insight
• The Open-ended period: more flexibility
than others
Accounting as a current
economic reality