There is always a reason behind each and every action of a human being. A man does not anything without any sound reason. Regarding Finance, or financial matters, a man is always extra cautious and so, he never makes any financial transaction without any reason. As accounting deals with financial transactions, so every accounting work is also based on reasoning. Accounting Theories always try to explain with reason, the logic underlying a particular practice. Generally Accepted Accounting Principles cannot be changed completely as they are widely and universally accepted but they can be reformed and remoduled to suit the needs of any changed Society or Economy. Accounting Theories point out to the scientific ways of thinking for the solution of any real world accounting problem. According to Prof.Hendriksen, “Accounting Theory may be defined as logical reasoning in the form of a set of broad principles that provide a general frame of reference by which accounting practice can be evaluated and guide the development of new practices and procedures. To be absolutely able to solve any real world accounting problem, an accountant should have sufficient practical experience aided by adequate theoretical knowledge. Generally accepted accounting principles, widely used customs, conventions, doctrines, procedures and postulates constitute accounting theories. Thus, a logical and confirmed hypothesis, accepted a general by all, may be called Accounting Theory. As all other theories are based on sound and solid reasoning. Accounting Theories are similarly based on sound reasoning. Accounting theory and Accounting Practices are absolutely closely related. They are so close, as it is very difficult to make them separate. Accounting Theories have developed through observation, analysis, explanation, scrutiny and scanning of the day-to-day accounting practices. Again on the other hand, the day-to-day accounting practices are performed by successful...
Please join StudyMode to read the full document