The several approaches to accounting theory, 1. Deductive recur sing or “approach going from the general to the specific. ” 2. Inductive approach ‘Going from the specific to the general. ’ 3. The ethical approach of accounting theory places emphasis on the concept of justice, truth & fairness. This is particularly true of the ethical approach, for defining it of the separate approach does not necessarily imply that other approaches do not have ethical content, not does it imply that ethical theories necessarily before of other content. I.
Accounting procedures must provide equitable treatment to all interested parties. II. Financial reports should present a true & accurate statement without misrepresentation. III. Accounting Data should be fair, unbiased & impartial without serving special interest. The concept of fairness has long been the basic objectives in the presentation of audited financial statement. The generally accepted accountants short from report or certificate states, impart, “ In our opinion, the accompanying statements present fairly the financial position of the company as of & the result of its operations for the year then ended. 4. Communication theory approach accounting can borrow profitability other social sciences in establishing a framework for the development of they & in evaluating the proper objectives of accounting. This communication process involves a determination of what information regarding a firm should be interpreted & the selection of the best method of communication. An example, of the application of the communication approach it’s found in “A statement of basic accounting theory. ” Prepared by a committee of the American Accounting Association in 1966.
It defines accounting as “The process of identifying, measuring, & communicating economic information to permit informed judgments & decision by users of the information. ” 5. The behavioral approach; accounting theory can also draw on a study of behavioral relationship as analyzed in the field of psychology, sociology & economics. Accounting is the means for providing information for proper decision making by firms, individuals & groups react to accounting data should be of direct concern to accountants. 6.
Sociological approach is the behavioral approach in the accounting principal are judge by the resulting affect, But the goal is the broader sociological effect rather than the decisions of the immediate users of accounting data. One of the objective accounting is therefore, the reputing of the effect of business operations on all related groups in society whether or they not they are direct uses of accounting information. 7. A macroeconomic approach is similar to the behavioral & sociological approaches in that one of the objectives of accounting is to direct the behavioral firms & individuals. . The Pragmatic approach involves the development of ideas that are in agreement with the real world & find usefulness in realistic situation. As applied to accounting theory, the pragmatic approach involves the selection of accounting concepts & techniques based on their utility. 9. Non-theoretical approaches; while an emphasis on a single one of the above approaches to accounting may lack a structure of logical reasoning & thus be non theoretical , in most cases attempt has been made to weave the concepts
