Transcript ACCOUNTING THEORY AND ANALYSIS: TEXT, CASES AND

ACCOUNTING THEORY
Hashemite University
Dr Husam Al-Khadash
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CHAPTER 1
THE DEVELOPMENT OF
ACCOUNTING THEORY
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Introduction
• What is theory?
• What is the relationship of accounting
research to accounting theory?
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Accounting Theory Defined
“. . . a set of basic concepts
and assumptions and related
principles that explain and
guide the accountant’s
actions in identifying,
measuring, and
communicating economic
information.”
Structure of Accounting Theory
Informal Approach
Accounting
Theory
Accounting theory is somewhat like a cloud, i.e. not well-defined.
Accounting Theory and the need for accounting framework
Accounting
theory
Accounting
research
framework
STANDARDS
Accounting
practice
PRINCIPLES
ASSUMPTIONS
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2010 ©Dr Husam Al-Khadash-
Accounting in practice is
Recognition
Measurement
Communication
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2010 ©Dr Husam Al-Khadash-
Research Methodology
• Deductive approach
• Inductive approach
• Scientific Method
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Deductive Approach
• Begins with the establishment of objectives
• Next definitions and assumptions are stated
• A logical structure for accomplishing the
objectives based on the definitions and
assumptions is developed
• Attempts to “theorize are generally based on the
deductive approach
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Inductive Approach
• Making observations and drawing
conclusions
• Generalizations are made about the universe
based upon limited observations
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The Scientific Method
• Involves the following steps:
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Identify and state the problem to be studied
State the hypotheses to be tested
Collect data necessary to test the hypotheses
Analyze and evaluate data
Draw a tentative conclusion
Most accounting research found in academic
journals uses the scientific method
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