Table of Contents
Prescriptive Theory and Descriptive Theory
Decision Usefulness Theory
Critical Accounting Theory and Critical Theory
Open System Theories
Behavioral Decision Theory
Political Economy Theory
Public Interest Theory
Economic Interest Theory/Private Interest Theory
Positive Accounting Theory
Chambers' Theory of Accounting
Trickle Down theory
Many accountants are familiar with the accounting standards and practices. They are always keeping their eyes on new standards and regulations roll-out. On the back of the new accounting practices, there are many accounting theories supported. Accounting standards are developed based on many descriptive and prescriptive accounting theories which were derived from many researches and studies performed by scholars and professionals. The backgrounds of the researches and studies are supported by some theories as well. The motivations of scholars in performing their studies, the society needs of new regulations as well as the information disclosure behaviors of entities can also be explained by theories. Various theories for and against regulation of financial accounting are discussed by the public. Various theoretical perspectives, including those provided by Positive Accounting Theory, Political Economy Theory, Stakeholder Theory, Institutional Theory and Legitimacy Theory can explain different types of voluntary reporting decisions. Critical (Accounting) theory, Behavioral Decision Theory Open System Theories and Decision Usefulness Theory goaded scholars and researchers to perform studies.
Prescriptive Theory and Descriptive Theory
Prescriptive theory means how accounting should be undertaken while descriptive theory means how accounting was generally performed.
There are many studies and researches performed around decision-makers emphasis and the decision-models emphasis. The aims of the studies are that the accounting experts want to figure out what information the financial statements users needs in order to develop the accounting frameworks. The users can rely on the information in making economic decisions. Some accounting professional develop prescriptive frameworks focused on the standards and presentations of financial reporting. Some accounting professionals concentrate on developing descriptive frameworks to express how accounting was generally performed. Prescriptive and descriptive accounting theories are inter-related. In general, prescriptive accounting frameworks are established based on the descriptive accounting frameworks.
Accounting conceptual frameworks are revised over time in order to reflect changes in markets, business practices and overall economic environment. Different countries have inconsistent frameworks because of different environment. However, with increasing use of IFRSs, it seems that global uniformity adopted by accounting regulators.
Why scholars and researchers in different countries are motivated to work on those studies? The objective is to ensure everyone in a community is treated fairly. Everyone can obtain the useful and meaningful information to make economic decisions. According to the results of the studies ad researches, accounting standard-setters and regulators therefore review and amend the organization financial disclosure requirements in order to ensure everyone is protected.
Reiter (1995), Economic theories tend to value the characteristics associated with the masculine stereotypes such as abstraction, mind, efficiency, equilibrium, rationality, pursuit of self-interest, and autonomy The opposite characteristics of concretism, body, randomness, humanity, mutuality and connectedness,...
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