Accounting Theory and Development

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Reading 1.2 - Accounting theory and development

Accounting Theory Construction with Inductive and deductive approach

Deductive approach vs. Inductive approach in accounting theory construction Deductive reasoning entails a valid argument in which it is impossible to assert the premises and to deny the conclusion without contradicting oneself.

Deductive approach to accounting theory construction begins with establishing the objective of accounting. Once identified, definitions and assumption must be stated. The researcher must then develop a logical structure for accomplishing the objectives, based on the definitions and assumptions.

The methodology is often be “going from the general to the specific” as the research must develop a logical structure for accomplishing the objective then, which based on the definition and assumptions.

The validity of any theory developed through this process is highly dependent upon the ability of the researcher to correctly identify and relate the various components of the accounting process in a logical manner.

Induction is a method of reasoning by which a general law or principle is inferred from observed particular instances.

Inductive approach emphasis making observations and drawing conclusions from it and is often be “ going from specific to general, because the research generalizes about the universe on the basis of limited observations of specific situations. The inductivist is to draw theoretical and abstract conclusion from rationalizations of accounting practice.

Applied to the accounting, the inductive approach begins with observations about the financial information of business enterprises and proceeds to construct generalizations and principles of accounting from those observations on the basis of recurring relationship.

Reading 1.2 - Accounting theory and development

Accounting Theory Construction with Inductive and deductive approach

Normative theory vs. Positive theory...
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