Discuss the Perception that Financial Accounting Appears to be Transforming

Discuss the Perception that Financial Accounting Appears to be Transforming

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This essay is going to discuss the perception that financial accounting appears to be transforming. It demonstrates that why the financial accounting theories appears and the difference between descriptive and prescriptive methods of research; the reason why researches might shift from one method to another and how the accounting theories influence by some famous researchers contribution such as Paton, Littleton and Chambers.

Accounting is a human activity; therefore accounting theories should consider people’s behavior with respect to accounting information. (Deegan, 2009, p.4) Hendriksen (1977, p.1) defends that accounting theory should be logical in the form of broad principles. It provides a general framework of reference by which accounting practices can be evaluated and guides the development of new practices and procedures. According to SAC 1 paragraph 12 (CPA, 2009), user needs accounting information to making resource allocation decisions. In order to provide the high quality and relevant information to achieve user needs, researchers attempt at constructing accounting theory to improve accounting practice and the quality of accounting information. (Gaffikin, 2005, p.3) Consequently, financial accounting theories come into view.

Research and develop the accounting theories fundamentally use “Inductive” or “Deductive” method. Inductive method such as descriptive theories suggests that theory is drawing a conclusion from a set of facts or evidence. (Deegan, 2009, p.8) It is because accounting theories should consider people’s behavior; the observation and conclusion form a set of facts can have extensively adoption. The research is based on careful observing of accounting practice in accountants consistent behavior (H...

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Puchler, J. A. (1974), “An Economic Analysis of Accounting Power”, Institutional Issues in Public Accounting, pp. 45-73.

Scott, DR. (1941), “The Basis for Accounting Principles”, Accounting Review, Vol. 16 Issue 4, p341, 9p.

Selvanathan, A., Selvanathan, S., Keller, G. & Warrack, B. (2006), “Australian Business Statistics 4th Edition”, Thomson, Australia.

Skolnick, G. (1969), “A History of Accounting and Accountants”, New York Certified Public Accountant, Vol. 39, Iss. 000012; p. 922.

Sweeney B. & O’Reilly J. (2004), “Law in Commerce 2nd Edition”, Butterworths, Australia.

Watts, R. L. & Zimmerman, J. L. (1979), “The Demand for and Supply of Accounting Theories: The Market for Excuses”, Accounting Review, Vol. LIV, No. 2, pp. 273-305.

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