The Demand for and Supply of Accounting Theories

Topics: Science, Scientific method, Accountancy Pages: 14 (5427 words) Published: January 11, 2013
It has been become an issue of great concern that the accounting profession must find a common theory in order to address and put the issue at rest. This therefore, has called for the study of this topic under review “the demand for and supply of accounting theories: the market for excuses. As a result of this several questions have been raised. For instance, the question of why accounting theories are predominantly normative has been put forward by this article? Secondly, why no single theory in accounting profession that is generally or widely accepted? It has been argued that the financial accounting theories have been found to be ineffective most especially in the area of impacting accounting practice and policy, though, this has been linked to the weaknesses in accounting methodologies. This article went further to examine the demand for accounting theories in an unregulated economy and also the demand for accounting theories in a regulated economy. Coupled with these is the effective of government intervention on the demand for accounting theories. Based on this, the author has argued that government regulations seems to provide some sort of incentives mostly for individual lobbyist that proposed accounting procedure, therefore, producing a negative effective with regard producing a common accounting theory. From the look of thing one could argued that the changes political issues and scenario will also continue to create changes in the accounting theories. The author noted that the nature of accounting theories will continue to change as political issues change. Conclusively, first, we need to understand the vital role of accounting theories in determining the accounting standard and therefore, the theories should be included in the process of determining accounting standard. The Methodology of Positive Accounting (Juma’s assignment) The problems of accounting theories have become a wide and global concern to the extent that some have aired their views in this regard. Notable among them is the “Rochester School of Accounting”. This group of accounting professional has raised a number of methodological issues. The major argument here is that most of accounting theories are perceived to be unscientific in nature, this perhaps could be in terms of its quantitative nature applied in the methodology. Therefore, there is need to develop a positive accounting methodology that will yield a positive result in the scientific direction. The development of this methodology will answer questions such as “why accounting is what it is, why accounting do what they do, and what effects these phenomenon have on people and resources?” Furthermore, the arguments of the Rochester School of Accounting on the unscientific nature of accounting theories have not been accepted. Several authors have greatly criticized the view of the Rochester school on the ground of inability of the school to demarcate between the two major phenomenons of “positive” and “normative” theories. Again, his concept of positive theory of accounting is nothing but a flaw with respect to empirical science. Within the context of this review, two methodological views have evolved namely; the instrumentalism and the realism. However, the Rochester school of accounting has been exonerated from the various criticisms emanating from instrumentalism review. Although, even if the old ways of doing things in accounting have been argued to be ineffective, they tend to remain relevant. However, the new methodologies being proposed are by no means free from criticism, however, they also remain relevant in determining some of the accounting standards. Therefore, should not be neglected or abandoned. Introduction:

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