StudentShare
Contact Us
Sign In / Sign Up for FREE
Search
Go to advanced search...
Free

Accounting i a subjective subject - Essay Example

Cite this document
Summary
A theory'ѕ ѕucceѕѕ aѕ a theory dependѕ on itѕ value to uѕerѕ in explaining and predicting eventѕ.Aѕ of now there iѕ not one theory in accounting that can be called "The Accounting Theory," aѕ no one theory can currently explain and/or ѕucceѕѕfully predict all accounting phenomena…
Download full paper File format: .doc, available for editing
GRAB THE BEST PAPER94.6% of users find it useful
Accounting i a subjective subject
Read Text Preview

Extract of sample "Accounting i a subjective subject"

Accounting I A ubjective ubject Accounting I A ubjective ubject Introduction A theory' ucce a a theory depend on it value to uer in explaining and predicting event. A of now there i not one theory in accounting that can be called "The Accounting Theory," a no one theory can currently explain and/or uccefully predict all accounting phenomena. However, the paper doe take into account the potential value of the poitive theory of accounting and it limitation. Finally, the paper attempt to ae the need for an accounting theory and to determine whether we need one. If it i to be comprehenible and reliable, accounting mut be ued in accordance with pecific rule and regulation. It would be chao of Babylonian proportion if each peron ued hi own grammar and vocabulary - nobody would undertand anybody ele. Likewie, it i eential that accounting i ued according to generally accepted rule. (Thoma , 2003, 10) Accounting Hitory The hitory of accounting i a old a civilization, key to important phae of hitory, among the mot important profeion in economic and buine, and facinating. Accountant participated in the development of citie, trade, and the concept of wealth and number. Accountant invented writing, participated in the development of money and banking, invented double entry bookkeeping that fueled the Italian Renaiance, aved many Indutrial Revolution inventor and entrepreneur from bankruptcy, helped develop the confidence in capital market neceary for wetern capitalim, and are central to the information revolution that i tranforming the global economy. There are no houehold name among the accounting innovator; in fact, virtually no name urvive before the Italian Renaiance. It took archaeologit to dig up the early hitory and cholar from many field to demontrate the importance of accounting to o many apect of economic and culture. The role of accountant in the ancient world i coming into clearer focu with new archaeological dicoverie and innovative interpretation of the artifact. It i now evident that writing developed over at leat 5,000 year--by accountant. It i difficult to overetimate the importance of double entry bookeeping. It wa central to the ucce of Italian merchant, neceary to the birth of the Renaiance. Indutrial Revolution firm required accountant to provide the information neceary to avoid bankruptcy and their role developed into a profeion. Big buine required capital market that depended on accurate and ueful information. Thi wa upplied by the expanding accounting profeion. Today, a global real-time integrated information ytem i a near reality, uggeting new accounting paradigm. Undertanding hitory i needed to develop the linkage to predict thi future. The firt prerequiite i that accounting hould agree or conform with the baic truth according to which our economic ytem function; the current economic and buine practice and the applicable law a embodied in legilative regulation or common law. Conequently, it i important that uniformity i maintained in accounting practice; in other word, a pecific et of circumtance, wherever it may be encountered mut be dealt with by everyone in exactly the ame way within the accounting proce. Accounting theory create a framework that enure that accounting practice complie with the requirement of conformity and uniformity. Thi theory i embodied in a et of principle, policie, method, procedure and convention. The continuouly increaing cope and complexity of our economic ytem require a correponding proce of adaptation in accounting in order that the relevant information regarding economic activitie may be recorded. It i eential that everyone involved in accounting hould undertand thi proce of adaptation; moreover, a prerequiite for uch undertanding i a grap of not only the theory of accounting, but alo the tructure of that theory. (Thoma , 2003, 10) Accounting theory i baed on a et of baic economic truth that are of a dual nature. Firt, accounting theory i baed on propoition generally accepted in the economic order of a particular ociety. For example, conider the concept of peronal ownerhip: a general accepted tenet of our ociety i the excluive right of every peron to own thing - they are hi peronal property and no one ele'. Thi concept i a baic economic truth. (AC , 2001, 44) econd, the baic economic truth have characteritic imilar to thoe of natural law in the ene that pecific caue generate pecific conequence. If, for example, omeone derive greater value from a tranaction than what wa put into the tranaction, hi net worth - hi wealth - will have increaed by the urplu amount. Thi, too, i a baic economic truth. Thee economic truth are formulated a concept and potulate. A concept i a generally accepted view of a pecific phenomenon, which i decribed in pecific term. A potulate i a generally accepted hypothei or uppoition of a pecific condition or phenomenon, which erve a a bai for the formulation of principle. In the development of accounting theory, concept and potulate erve a formulation of the baic truth or propoition upon which the theory i baed. They do not attempt to precribe the working of the accounting proce, but imply the foundation upon which the tructure of accountancy i baed. Undertanding the Problem Firt, the accounting principle of cauality i currently applied inconitently. For example, in lean accounting, cauality i deemphaized and the concept of a flow-path become the overriding principle. econd, the variou accounting modeling aumption relationhip (i.e., throughput accounting, variable coting, lean accounting, traditional full coting, activity-baed coting, and reource conumption accounting) produce contradictory reult.In addition, accounting concept are ubject to incongruent treatment. For example, according to Van der Merwe, the idea that the cot behavior concept of fixed and variable are ynonymou with the deciion upport concept of avoidable and unavoidable i commonplace. The area of deciion upport ha the greatet potential for inconitency ince the variou accounting approache view the ame deciion in different way. Thi i illutrated with a product mix example where different approache produce different deciion, i.e., where the deciion i baed on either throughput or variable cot. The main problem i that contradiction and inconitencie frequently reult when the variou accounting approache are applied becaue the underlying fundamental are interpreted differently. What i needed i a et of diciplined fundamental that all in the profeion can ubcribe to that will erve a a foundation for learning and communication. (Howieon, 1997, 3-12) Accounting theory from David olomon David olomon had an impact on Britih accounting in at leat five area: management accounting, accounting education, accounting hitory, financial accounting theory and accounting tandard-etting. Making Accounting Policy goe beyond a cogent, thoughtful analyi of the problem; it provide a logical and compelling olution." The "problem" wa that company balance heet howed what had happened. "The accounting policie that companie follow in preparing their financial tatement have aumed critical importance in recent year. The way that revenue and expenditure, aet and liabilitie are treated can make an enormou difference in the way a firm' performance and it financial poition are judged by tockholder, the financial community, the regulatory agencie and the public," write David olomon in hi blurb for "Making Accounting Policy: the quet for credibility in financial reporting" (1986). Depite the title, the book eemingly make out a cae for exactly the ort of accounting that would later mutate into the moke and mirror that fueled the dot-com boom and facilitate the me that became Enron and other. It would be wrong to lay the blame for all that at olomon' door but not only did he promote the "tandard" in thi book but alo played a major role in the UA' Financial tandard Accounting Board having been on the committee that formed it and a member of it from 1982-1985. Thi book, written in 1986 may therefore be taken to have coniderable authority. He ay that accounting hould et out "the economic reality" of but buine. He ay of the Board "I make no ecret of my preference for a ytem baed on current, not pat cot. In my view, there i an urgent need for change," and "at the preent time, thoe who, like me, advocate a model baed on current value are in a minority."Unfortunately, the quetion of current value wa, even a the book wa publihed, being tretched. Following an analyi of variou alternative type of current cot accounting, olomon write "the preferred alternative, without much doubt, i current cot contant purchaing power accounting." o, what it i It i a meaure of value with regard to predictive purchaing power to take account of anticipated inflation. In hort, it already creating a fiction in the account. It retate appreciating non-monetary aet at their enhanced value: whilt one can ee ome merit in thi argument for, ay, property it i in the uppoed value of "goodwill" or brand value that the opportunity arie for hugely overtated figure in order to hore up balance heet. Concluion Accounting at any point in time and place can repreent the level of civilization then and there. A civilization began around village and developed into empire, cribe invented record keeping ytem and kept running inventorie of wealth, trade, and tribute payment. Accountant invented writing uing abtract record keeping a temple (and later imperial) wealth and complexity expanded. Double entry bookkeeping played a crucial role of Italian merchant' uperior trading kill. Would the Renaiance have been poible without double entry Buine hitory involve long-term procee that incorporated dozen of pecific innovation. For example, the Indutrial Revolution included many invention from Watt' team engine to Hargreave' pinning jenny. Equally important were the entrepreneur who ued the invention uccefully, often combining everal innovation to create a ucceful buine, and the change to ociety aociated with a new urban labor cla. The concept of time took on a whole new meaning. Thi wa a revolution not becaue it occurred quickly, but becaue it changed civilization in fundamental way. The middle cla (that' mot of u) i a direct reult, a i the aociated mind et-the work day, commuting, a tandard of living well above ubitence, and o on. Accounting' role wa primarily one of buine urvival, which led to economic innovation.. (Van ,2007, 33) Reference Van der Merwe, A. 2007. Management accounting philoophy II: The cornertone of retoration. Cot Management (eptember/October): 26-33. (ummary). Van der Merwe, A. 2007. Management accounting philoophy III: The management accounting evaluation framework. Cot Management (November/December): 20-29. AAB 1023--Financial Reporting of General Inurance Activitie, 2001 pp853-889, Accounting Handbook Cunningham, 2004, ACCT29083: Theory of accounting: tudy guide, Central Queenland Univercity, Rockhampton Cunningham, 2004, ACCT29083: Theory of accounting: olution manual, Central Queenland Univercity, Rockhampton Deegan, C 2000, Financial accounting theory, McGraw-hill, Roeville Howieon, B, 'International Harmonization: He Who Pay The Piper Call The Tune', 1997, Accounting Review 8 (1): pp 3-12 IAB, 2002b, 'Framework for the Preentation and Preparation of Financial tatement', International Accounting tandard, 2002, pp F1-F35, London, International Accounting tandard Board. Jayne M Godfrey, Ian A Langfield-mith, 'Regulatory capture in the globalization of accounting tandard', WPG 04-08 AC 2--Objective of General Purpoe Financial Reporting. Accounting Handbook 2001 AC 4--Definition and Recognition of the Element of Financial tatement. Accounting Handbook, 2001 Thoma A Gavin. 'Improving the financial reporting proce', Commercial Lending Review. New York: ep 2003. Vol. 18, I. 5; pg. 10 Read More
Cite this document
  • APA
  • MLA
  • CHICAGO
(“Accounting i a subjective subject Essay Example | Topics and Well Written Essays - 1500 words”, n.d.)
Retrieved from https://studentshare.org/finance-accounting/1529439-accounting-i-a-subjective-subject
(Accounting I a Subjective Subject Essay Example | Topics and Well Written Essays - 1500 Words)
https://studentshare.org/finance-accounting/1529439-accounting-i-a-subjective-subject.
“Accounting I a Subjective Subject Essay Example | Topics and Well Written Essays - 1500 Words”, n.d. https://studentshare.org/finance-accounting/1529439-accounting-i-a-subjective-subject.
  • Cited: 0 times

CHECK THESE SAMPLES OF Accounting i a subjective subject

Limits of Human Knowledge and Experience

It is a very complicated subject with a lot of debate and disagreement among scholars.... rdquo; Scientific endeavor was thus directed to make knowledge independent of the observer (subjective) into an enduring truth.... This essay declares that the philosophical sub stream of epistemology concerns itself with questions surrounding the modes, methods and capacities of human knowledge acquisition....
4 Pages (1000 words) Essay

The Role of Cost Accounting in Business Planning, Control, and Decision Making

Today, the scope of cost accounting has enlarged to such an extent that it now refers to the collection and providing all sorts of information that assists the executives in fulfilling the organizational goals.... … Traditionally, cost accounting is considered as the technique and process of ascertaining costs of a given thing, In sixties, the definition of cost accounting was modified as the application of costing and cost accounting principles, method and techniques to the science art and practice of cost control and ascertainment of profitability of goods, or services....
5 Pages (1250 words) Essay

Career Aspirations

After leaving my studies, I intend to be employed in a medium-sized accounting firm so I can gain experience.... t is a must for an accountant to have an over-all knowledge of accounting, finance, budgeting, cost control and the GAAP (Generally Accepted accounting Principles)....
11 Pages (2750 words) Research Proposal

University Education Efficiency for Accounting/Business Graduates

The essay "University Education Efficiency for accounting/Business Graduates" evaluates the role of higher educational institutions in equipping business and accounting graduates with skills required by their prospective employers.... hellip; For centuries, accounting and business remained major sectors that contributed enormously to human society.... Although their objectives were different in various eras, such as during ancient times, accounting was a tool to record only transactions of emperors, rulers, and elite members of the society, while in another era, it came down to help business individuals and entrepreneurs on the local level as well....
7 Pages (1750 words) Essay

Accounting Information System Selection in Small Organizations by Gray

An accounting information system is a system used by businesses to maintain their accounts (David & Merle, 1996).... The main reason accounting information… accounting information systems were previously paper based, however with the growth of technology, now most companies use electronic The main aim of this paper is to provide a critical review of the article “accounting Information System Selection in Small Organizations: Incongruences between accounting Professionals” by Glen L....
6 Pages (1500 words) Essay

Accountant at MAU Workforce Solutions

hellip; Skills required for the job: Strong analytic skills Effective organizing skills Scheduling and multitasking skills Peachtree accounting skills Fixed assets entry and management skills Skilled in the use of spreadsheet and database software Skilled in preparing invoices and receipts Qualification required for the job: Bachelor's degree in finance Proficiency in using different accounting software and Oracle I am writing to apply for the accounting position advertised in newspapers last week....
2 Pages (500 words) Resume/CV

Does Accounting Constructs Reality

Accounting is considered as a very important subject in our modern world.... accounting is an important element of business as it assists in recording… The scope of accounting is very wide.... accounting is mainly defined as a means not an end as it calculates and determines the financial result and position of an organization (Burchell, Clubb, Hopwood, Hughes and Nahapiet, accounting is a language of business through which the information is passed to the users of the financial statement....
7 Pages (1750 words) Essay

Whether or Not Accounting Is an Objective Subject

The paper "Whether or Not Accounting Is an Objective subject" highlights that generally, accounting is tasked with the goal of providing a fairly accurate financial picture of a business, for the purpose of scrutiny of parties external to the business.... hellip; Accuracy entails objectivity, thus what is put in question is the objectivity of financial accounting.... nbsp; The various theories presented different ways of understanding the accounting activity, and in interpreting the information with which it deals....
10 Pages (2500 words) Coursework
sponsored ads
We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.
Contact Us