StudentShare solutions
Triangle menu

Financial Accounting Theory - Essay Example

Nobody downloaded yet

Extract of sample
Financial Accounting Theory

One of the prominent implementations of accounting theory is in terms of developing normative standards. In these regards, accounting theory functions as a means of legitimizing the discipline of accounting in that articulates standards and regulations that establish public faith in the process (Deegan & Unerman 2011). Specific instances such prescriptive theories are implemented can be witnessed in terms of assets, wherein normative theories explore how these elements should be recorded (Deegan & Unerman 2011). Another such instance is prescriptive standards regarding the amount of accounting information that should be supplied to various stakeholders. In addition to normative accounting theories, there is also predictive or positivist accounting theories. Positivist theory seeks to develop predictive insights based on objective occurrences. There is an array of positivist perspectives. For instance, it’s noted that positivist theory seeks to make predications regarding the nature of managerial compensation and accounting practices (Deegan & Unerman 2011). In these ways positivist accounting theories function both to allow investors or stakeholders increased insight into accounting motivations, as well as a means of gaining a broader understanding of financial markets as a means of contributing to more accurate normative structures. There are a number of concerns related to positivist accounting theory. To an extent I would say that I am a positivist. The notion of positivist accounting is linked to philosophical notions of theory. While one of the central tenants of positivist accounting theory is that markets are efficient, clearly this constitutes a weak version of the EMH as contained within it is the notion that corporations and accountants will act in self-interest contingent upon at times a partial understanding that accounting procedures will affect market conditions (Tinker, Merino, and Neimark 1982). I accept the notion this weak notion of EMH, with markets responding to all available information, but also recognize that in many situations human behavior plays a highly important role in security valuations. Not simply in investor behavior, but also in the self-interested behavior of accounting professionals. Considering that markets are oftentimes driven by external and internal behavioral elements the propensity of a positivist approach to accounting theory, while to a great degree fallible, nonetheless holds the propensity towards tangible and functional insight (Chua 1986). In these regards I believe that positivist theoretical explanations of accounting practices and market conditions are essential to a progressive understanding of both human behavior and market impact. Ultimately, a furthered understanding, while understandable imperfect, can still contribute to more equitable and transparent accounting practices. In these regards, I while I would not entirely refer to myself as positivist; I recognize the importance and effectiveness of positivist theory to the accounting profession. 2. Explain why you think regulation of financial accounting is needed or not needed. Recent occurrences in financial markets have brought to light the tremendous need for regulation of financial accounting. From an overarching qualitative perspective, one considers erroneous accounting procedures in organizations such as Enron, or the recent MF Global scandal wherein customer funds were inappropriately ...Show more


Financial Accounting Theory 1. What is the purpose of financial accounting theory? Are you a positivist? Explain why you agree or disagree with positive accounting theory. The purpose of financial accounting theory is broad and complex, spanning an array of issues…
Author : lebert
Financial Accounting Theory essay example
Read Text Preview
Save Your Time for More Important Things
Let us write or edit the essay on your topic
"Financial Accounting Theory"
with a personal 20% discount.
Grab the best paper

Check these samples - they also fit your topic

International Financial Accounting and Social and Environmental Theory
The society can include institutions, social groups, shareholders of organizations, cultures and the society in general. The role of stakeholders in the society, which involves collective contributions by individuals, is the focal point of financial accounting, social and environmental theory.
8 pages (2000 words) Essay
Financial Accounting Theory
A conceptual framework is developed from the existing theories. Based upon this an exploratory research is done and along with the subjective belief on the concerned topic a conceptual framework is made by the researcher. Several theoretical frameworks are made after the financial crisis of 1929 and also after the recent financial crisis.
6 pages (1500 words) Essay
International Financial Accounting and Theory
Corporate governance also describes the manner in which company management, board, stakeholders and shareholders relate to each other so that conflict of interest is mitigated. The developments in the corporate governance of the United Kingdom companies have led to influential changes which have stimulated similar amendments in the corporate governance of the European Union in general and that of the United States.
7 pages (1750 words) Essay
International Financial Accounting and Theory
Accounting practices of the modern times are faced with numerous factors to account for in the contemporary business environment. Social and environmental accounting is a contemporary component of accounting principles and standards. It goes beyond the formal record keeping and financial reporting to encompass internal and external information demands by accounting stakeholders in the economies.
6 pages (1500 words) Essay
Financial Accounting theory and issues
This is necessary to achieve because of the perception that the venture gains legitimacy in the eyes of its external environment thereby ensuring the success and continuity of the endeavor. Oil corporations, for example, continue to enjoy huge profits
4 pages (1000 words) Essay
Financial accounting theory
It is unclear whether single set of GAAP, or a GAAP with exclusions of SMEs , can provide an appropriate balance between primary objectives for both public corporations
10 pages (2500 words) Essay
Financial Accounting Theory. Assignment 2
ly important that the results of such transactions are recorded regularly so as to provide an account of such happenings, the result thereof and also predict the future visibility. Accounting is one such function which provides the guidelines for reporting for all types of
12 pages (3000 words) Essay
Accounting Theory
However, these figures depend entirely on the accounting policies, theories and methodologies adopted by the organization and in many
7 pages (1750 words) Essay
stakeholders in the society, which involves collective contributions by individuals, is the focal point of financial accounting, social and environmental theory. The primary issue concerning social and environmental theory is the way the society determines developments, goals,
8 pages (2000 words) Essay
International Financial Accounting and Theory
The developments in the corporate governance of the United Kingdom companies have led to influential changes which have stimulated similar amendments in the corporate governance of
7 pages (1750 words) Essay
Hire a pro to write
a paper under your requirements!
Win a special DISCOUNT!
Put in your e-mail and click the button with your lucky finger
Your email
Comments (0)
Click to create a comment
Contact Us