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    The Structure of Accounting Theory

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    SarahShohaimay
    The document outlines the structure of accounting theory. It discusses the objectives of financial accounting which provide the basis for postulates and theoretical concepts. There are four main postulates: entity, going concern, unit-of-measure, and accounting period. Three theoretical concepts are also described: proprietary theory, entity theory, and fund theory. Principles like cost, revenue matching, and consistency are derived from these concepts and used in accounting techniques and standards.

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    The Structure of Accounting Theory

    Uploaded by

    SarahShohaimay
    6K views3 pages
    The document outlines the structure of accounting theory. It discusses the objectives of financial accounting which provide the basis for postulates and theoretical concepts. There are four main postulates: entity, going concern, unit-of-measure, and accounting period. Three theoretical concepts are also described: proprietary theory, entity theory, and fund theory. Principles like cost, revenue matching, and consistency are derived from these concepts and used in accounting techniques and standards.

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    Accounting

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    The document outlines the structure of accounting theory. It discusses the objectives of financial accounting which provide the basis for postulates and theoretical concepts. There are four main postulates: entity, going concern, unit-of-measure, and accounting period. Three theoretical concepts are also described: proprietary theory, entity theory, and fund theory. Principles like cost, revenue matching, and consistency are derived from these concepts and used in accounting techniques and standards.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    6K views3 pages

    The Structure of Accounting Theory

    Uploaded by

    SarahShohaimay
    The document outlines the structure of accounting theory. It discusses the objectives of financial accounting which provide the basis for postulates and theoretical concepts. There are four main postulates: entity, going concern, unit-of-measure, and accounting period. Three theoretical concepts are also described: proprietary theory, entity theory, and fund theory. Principles like cost, revenue matching, and consistency are derived from these concepts and used in accounting techniques and standards.

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    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
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    The Structure of Accounting Theory

    Objectives of Financial

    Accounting Postulates Entity Postulates Going concern Postulates Unit-of-Measures Postulates Accounting Period

    Theoretical Concept Proprietary Theory Entity Theory Fund Theory

    Accounting Principles Cost Principle Revenue Matching Objectivity Consistency Full Disclosure Materiality

    Accounting Techniques

    Objectives of Financial Statement To present fairly and in conformity with GAAP, the position, results of operation and changes in financial position for investors to make relevant investment and credit decisions. Definition of objective contained three areas. i. The user of information Specifically the investors group, to whom information is directed ii. Purpose to which accounting information is generated For making investment and credit decisions. The nature of content of information specified On performance, position and changes in position of an enterprise.

    iii.

    The structure of accounting theory is formulated via deduction approach where objective provide basis for both postulates and theoretical concepts form which techniques are derived.

    Theoretical Concept Clear and precise statements that portray the nature of accounting entities operating in a free economy characterized by private ownership of property. Belkaoui (1993) described three theoretical concepts i. Proprietary Theory An entity is an agent, representatives or arrangement through which the individual entrepreneur or shareholder operate. Littleton (1933) provides the substance of double entry system which justify why debits should equal credits. Logic of accounting is based on the purpose of the firm, nature of capital and meaning of accounts form owners perspective. The owner is the focus of attention and as a result all accounting concepts procedures and rules are formulates in his interest. Assets Liabilities = Proprietors Equity Developed when proprietorship and partnership were popular. ii. Entity Theory To be separated and distinct from those who provide capital to the entity. All accounting procedures are conducted from the viewpoint of the entity. Does not focus on net worth but the business that owns the assets and liable to all obligation. Assets = Equities Shareholders have no claim to any particular assets or income of the company, except those dividends declared by the company. Most suitable to corporation accounting Fund Theory Focuses on the group of assets and related obligation and restriction that governs the use of the assets. Assets = Restriction on Assets Directed for specified purpose via services derived from the use of the assets. Is applicable for government and non-profit organization such as government hospital, the United Nations & ASEAN.

    iii.

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