Postive Accounting Theory

  • Premium Essay

    Accounting Theory

    investors in a positive way. Part 2 From research, we can develop a lot of theories based on our behaviours. Investors need to know the information about companies in order to make decisions. Investors constantly think about the future with information about the past. In essence all information disclosed in financial reports helps the investor make a decision with their investment and there are two theories that determine the effect of the issuance of these reports and the levels of activity

    Words: 771 - Pages: 4

  • Premium Essay

    Introduction to the Theory of Accounting and Control

    Introduction to the Theory of Accounting and Control ••••••••••••••••••••••••••••••••••••••••••••• Three ideas are central to understanding accounting and control in organizations. First, all organizations are sets of contracts among individuals or groups of indi­ viduals. Second, provision of shared information among the contracting parties helps design and implement these contracts. Finally, control in organizations is a sustainable balance or equilibrium among the interests of its participants

    Words: 3313 - Pages: 14

  • Premium Essay

    Summary of Accounting Theory

    Agency theory is based on the assumption that the individuals act to maximize their own expected utilities Relationship between one person (principal) entrusted to another person (the agent) RESIDUAL LOSS *Loss associated with no being able to fully align the intrst of principal with their agent BONDING COSTS *cost borne by the agent as a result of the aligning their interst EG: i)agent prepare the fs(effort & time) ii)Constraints manaher xtvt MONITORING COST *the cost observing

    Words: 480 - Pages: 2

  • Premium Essay

    Accounting Theory

    Accounting is one of the most complicated forums of recordkeeping in the world. It needs to be very precise in order to provide assurance for business owners and investors. This research will focus on rules-based accounting policies and principle-based accounting policies. While rules- based accounting policies are strict and follow an order, principle-based accounting policies tend to give more freedom for accountants to have the ability

    Words: 3002 - Pages: 13

  • Premium Essay

    Accounting Theory Paper

    Accounting Theory Market Efficiency Project Report 1.0 Objective An analysis of the 30 components in the Straits Times Index (STI) is conducted to ascertain whether the Singapore stock market is weak-form efficient. If the hypothesis holds, the stock prices should reflect all available information in historical prices. In order words, it is expected that the stock returns would demonstrate unpredictability and follow random walk given an efficient market. 2.0 Methodology The data used for

    Words: 3289 - Pages: 14

  • Premium Essay

    Accounting Theory

    Accounting theory without a doubt, has transformed rapidly throughout the years due to changes in society, environment, globalization, and the expansion of various industries, which ties in with the needs for new accounting standards. However, some basic aspects remain the same, for example, the double entry system. These drastic changes throughout the years call for a change in the accounting standards and in order for accounting standards to be fair, efficient, reliable and reflect modern practices

    Words: 2133 - Pages: 9

  • Premium Essay

    Financial Accounting Theory

    Scott, Financial Accounting Theory, 6th Edition Instructor’s Manual Chapter 2 Suggested Solutions to Questions and Problems 1. P.V. Ltd. Income Statement for Year 2 Accretion of discount (10% × 286.36) $28.64 P.V. Ltd. Balance Sheet As at Time 2 Financial Asset Cash $315.00 Shareholders’ Equity Opening balance Net income Capital Asset Present value 0.00 $315.00 $315.00 $286.36 28.64 Note that cash includes interest at 10% on opening cash balance of $150. 2. Suppose that P.V. Ltd

    Words: 112738 - Pages: 451

  • Premium Essay

    Theory Accounting and Practices

    providers needs in their joint project of revision of the Conceptual Framework when writing that financial reporting is not primarily directed to other groups than capital providers. There is a possibility that the objectives assigned to financial accounting as a social activity is directed by a dominant group that imposes its will on all others involved in the activity by making its own objective become the objective of the social activity (Dopuch and Sunder, 1980). Therefore, when criteria are

    Words: 430 - Pages: 2

  • Premium Essay

    Theory Accounting and Practices2

    1) Accounting Conceptual framework provides accountants with a constitution regarding the recording and reporting of financial information. Conceptual framework comprises the theoretical structures, including various assumptions, principles or rules, companies follow when conducting operations. A common use of conceptual framework is in the corporation’s corporate governance. The Financial Accounting Standards Board defined its conceptual framework as 'a coherent system of interrelated objectives

    Words: 1181 - Pages: 5

  • Premium Essay

    Positive Theory of Accounting

    Synopsis Positive accounting theory is perceived as a hypothetical study in accounting which helps in clarifying and foreseeing tangible accounting procedures. These theories have a tendency to rationalize why a number of accounting practices are accepted than others. Positive accounting theory was introduced to better apprehend exactly how practices in accounting must be effectively managed. Introduction Modern positive accounting research began flourishing in the 1960’s and other introduce

    Words: 1357 - Pages: 6

  • Premium Essay

    Positive Accounting Theory

    why not? Positive Accounting Theory (PAT) ▪ The branch of academic research in accounting that seeks to explain and predict actual accounting practices. ▪ Watts and Zimmerman: o PAT is concerned with explaining accounting practice. It is designed to explain and predict which firms will and which firms will not use a particular method…but it says nothing as to which method a firm should use. ▪ Explain why firms still use historic cost accounting, why certain firm switch

    Words: 290 - Pages: 2

  • Free Essay

    Accounting Theory Terms

    employment, employers (principal) may use piece rates/commissions, profit sharing, efficiency wages, performance measurement (including financial statements), the agent posting a bond, or the threat of termination of employment. Public interest theory is an economic theory first developed by Arthur Cecil Pigou[1] that holds that regulation is supplied in response to the demand of the public for the correction of inefficient or inequitable market practices. Regulation is assumed initially to benefit society

    Words: 668 - Pages: 3

  • Premium Essay

    Positive Accounting Theory

    Whittington notes, they are "two of the most widely discussed contributors to the accounting literature of the past decade" (1989, p. 327). They are also the joint founder-editors of The Journal of Accounting and Economics, a journal devoted to positive accounting research, which has achieved an international reputation. So their story, while admittedly controversial, has achieved credibility among a significant number of accounting researchers. But what accounts for that credibility? According to Watts

    Words: 1189 - Pages: 5

  • Premium Essay

    Positive Accounting Theory

    Financial Accounting Theory Chapter 8 – Summary The Positive Theory of Accounting 1. Outline In the text, Scott defines Positive accounting theory (PAT) as: “concerned with predicting such actions as the choices of accounting policies by firms and how firms will respond to proposed new accounting standards.” (263) PAT uses theory to predict the choices that management will make regarding their choice of accounting policies. This theory is introduced as a way to merge efficient securities

    Words: 2061 - Pages: 9

  • Free Essay

    Positive Accounting Theory

    Positive Accounting Theory: A Ten Year Perspective Ross L. Watts and Jerold L. Zimmerman University of Rochester ABSTRACT: This paper reviews and critiques the positive accounting literature following publication of Watts and Zimmerman (1978, 1979). The 1978 paper helped generate the positive accounting literature which offers an explanation of accounting practice, suggests the importance of contracting costs, and has led to the discovery of some previously unknown empirical regularities

    Words: 273 - Pages: 2

  • Premium Essay

    Postive Accounting Theory

    Positive accounting is the branch of academic research in accounting that seeks to explain and predict actual accounting practices. This contrasts with normative accounting, that seeks to derive and prescribe "optimal" accounting standards. The branch of academic research in accounting that seeks to explain and predict actual accounting practices. Positive accounting can be associated with the contractual view of the firm.[1][2] The firm is viewed as “a nexus of contracts” and accounting one tool

    Words: 700 - Pages: 3

  • Free Essay

    Positive Accounting Theory

    characteristics in accounting disclosures: a desirability trade-off Malcolm Smith Associate Professor of Accounting, School of Economics and Commerce, Murdoch University, Perth, Australia A number of studies in the USA, UK, Australia and Canada have addressed the evaluation of the usefulness of accounting information and sought to identify criteria for assessing the quality and utility of financial reports (e.g. Institute of Chartered Accountants in England and Wales (1975), Financial Accounting Standards

    Words: 3323 - Pages: 14

  • Free Essay

    Accounting Theory

    dengan sengaja, yang bertujuan untuk memperoleh sesuatu yang bukan merupakan hak pelakunya. Definisi fraud auditing menurut Association o f Certified Fraud Examiner (1993) adalah “An initial approach (proactive) to detecting financial fraud s, using accounting records and information, analytical relationships, and an awamess of fraud perpetration and concealment efforts. ” Definisi lain fraud auditing adalah pendekatan awal (initial approach) yang bersifat pro aktif untuk mendeteksi f i­ nancialfraud

    Words: 7126 - Pages: 29

  • Free Essay

    Financial Accounting Theory

    normative theories of accounting. In doing so we examined conceptual framework projects which prescribe guidelines for how accounting should be done. We then examined a number of normative theories relating to how profit and the elements of our financial statements should be measured. This week we abandon our normative theories and begin looking at positive theories. In particular we examine a positive theory that we have made mention of a number of times, Positive Accounting Theory or PAT. Upon

    Words: 455 - Pages: 2

  • Premium Essay

    Accounting Theory

    CGA-CANADA ACCOUNTING THEORY & CONTEMPORARY ISSUES [AT1] EXAMINATION March 2009 Time: 3 Hours Note: All references to the Handbook refer to the CICA Handbook. Marks 28 Question 1 Select the best answer for each of the following unrelated items. Answer each of these items in your examination booklet by giving the number of your choice. For example, if the best answer for item (a) is (1), write (a)(1) in your examination booklet. If more than one answer is given for an item, that item will

    Words: 7728 - Pages: 31

  • Premium Essay

    Accounting Theory and Conceptual Frameworks

    Accounting theory and conceptual frameworks After studying this chapter you should be able to: & explain what accounting theory is & describe the main attempts at constructing an accounting theory & appraise current developments in the area & describe and discuss the contents of the IASB Framework & appraise the quality and usefulness of the IASB Framework in the context of its self-declared purposes & describe and discuss the parts of IAS 1 relating to accounting concepts and policies & appraise

    Words: 14565 - Pages: 59

  • Premium Essay

    Accounting Theory

    Contemporary issues in Accounting Unit Code: ACCOO106 Assignment -1 Subject: Normative accounting theory To: Mr Khalid Mahmood Name: Muhammad Mehedi Alam ID: 21562675 Word count: 1145(reference excluded) Date of Submission-07/12/09 Normative accounting theories CPPA- current/constant purchasing power accounting CCA- current cost accounting CoCoA- continuous contemporary accounting Current purchasing power accounting a form of accounting that measures profit after allowing

    Words: 1299 - Pages: 6

  • Premium Essay

    Positive Accounting Theory

    136 Positive Accounting Theory and Science JCC Journal of CENTRUM Cathedra ™ Positive Accounting Theory and Science by M. Humayun Kabir Senior Lecturer, Faculty of Business Auckland University of Technology, Auckland, New Zealand Abstract This paper examines the development of positive accounting theory (PAT) and compares it with three standard accounts of science: Popper (1959), Kuhn (1996), and Lakatos (1970). PAT has been one of the most influential accounting research programs

    Words: 9637 - Pages: 39

  • Premium Essay

    Postive Accounting Theory

    positive accounting theory (PAT) and compares it with three standard accounts of science. There is some confusion about what PAT is. If the definition of accounting theory (i.e., accounting theory seeks to explain and predict accounting and auditing practice) given in Watts and Zimmerman’s 1986 book is taken to mean PAT, studies of accounting choices and auditing practices constitute PAT. At the same time, they also seek to explain the economics-based empirical literature in accounting and they

    Words: 6941 - Pages: 28

  • Premium Essay

    Accounting Theory

    ACCOUNTING CYCLE The Series of business transactions which occur from the beginning of an accounting period to the end of an accounting period is referred any specific period of time for which a summary of business’s transaction is prepared. Steps in Accounting Cycle:1. 2. 3. Journalizing (Recording) Posting to Ledger (Classifying) Final Account (Summarizing) Now Explain Steps:1 Recording:- This is the basic function of accounting. All business transaction, as evidenced by some documents such

    Words: 8181 - Pages: 33

  • Premium Essay

    Importance of Accounting Theory

    8 Accounting theory and conceptual frameworks After studying this chapter you should be able to: & explain what accounting theory is & describe the main attempts at constructing an accounting theory & appraise current developments in the area & describe and discuss the contents of the IASB Framework & appraise the quality and usefulness of the IASB Framework in the context of its self-declared purposes & describe and discuss the parts of IAS 1 relating to accounting concepts and policies & appraise

    Words: 14566 - Pages: 59

  • Premium Essay

    Accounting Theory

    SEC may issue fines. Unfortunately, there's not much individual investors can do. Accounting laws for large corporations are extremely complex, which makes it very difficult for regular investors to pick up on accounting scandals before they happen.  Question 2 What is F score? The Piotroski F-Score aims to identify the healthiest companies amongst a basket of value stocks through applying a set of nine accounting-based stock selection criteria Read more: http://www.businessinsider.com/the

    Words: 644 - Pages: 3

  • Premium Essay

    Positive Accounting Theory

    The Positive Theory of Accounting Outline In the text, Scott defines Positive accounting theory (PAT) as: “concerned with predicting such actions as the choices of accounting policies by firms and how firms will respond to proposed new accounting standards.” (263) PAT uses theory to predict the choices that management will make regarding their choice of accounting policies. This theory is introduced as a way to merge efficient securities markets with economic consequences. PAT takes the

    Words: 1003 - Pages: 5

  • Free Essay

    Accounting Theory

    These questions are from the Text Book – Scott, W.R., Financial Accounting Theory – 5th Edition, Person Prentice-Hall, 2009. ISBN: 978-0-13-207286-1. Question 1: From Chapter 4 (Efficient Securities Markets) Question 13. Zhang (2005) examined revenue recognition practices in the software industry. Software firms derive revenue from software licensing and post-contract customer support. In both cases, the point in time when significant risks and rewards of ownership are transferred to the buyer

    Words: 1222 - Pages: 5

  • Free Essay

    Accounting Theory

    mengenai pelaporan keuangan. IFRS merupakan standar akuntansi internasional yang disusun oleh IASB (International Accounting Standard Board). IASB dahulu bernama Komisi Standar Akuntansi Keuangan (IASC /International Accounting Standards Committee). IASC merupakan lembaga independen untuk menyusun standar akuntansi yang dikenal dengan Standar Akuntansi Internasional (IAS/International Accounting Standards). Organisasi ini memiliki tujuan mengembangkan dan mendorong penggunaan standar akuntansi global yang

    Words: 1925 - Pages: 8

  • Premium Essay

    The Importance of Studying Accounting Theory

    issues. Frameworks are usually more elaborate and detailed when the topics that are being studied have long scholarly histories (e.g., cognition, psychometrics) where active researchers traditionally embed their empirical work in well-established theories. Issues In Educational Research, Vol 14, 2004 [ Contents Vol 14 ] [ IIER Home ] Exploring the usefulness of a conceptual framework as a research tool: A researcher's reflections Robyn Smyth University of New England This paper outlines

    Words: 5364 - Pages: 22

  • Premium Essay

    Accounting Theory

    accelerate accounting of expected expenses, delay accounting of expected revenue, engage in off balance sheet transactions to make the company's profitability appear temporarily poorer, or simply promote and report severely conservative estimates of future earnings. And this phenomenon of accounting scandal exist in contemporary society. The integrity of the accounting profession and the credibility of financial information provided by businesses have been undermined by scandals. Accounting and business

    Words: 3366 - Pages: 14

  • Premium Essay

    Accounting Theory

    accountant is able to measure and chooses to measure…” (p. 480). Required: Discuss the extent to which the “scientific” world-view of mainstream accounting researchers, is grounded on a belief that “reality” exists independently of thee human subject and the possible implications this has for accounting theory development. Introduction Accounting is a subject that is guided with principles and regulations. Thus, it is often regarded as a rigid, rigorous, and highly analytical discipline with

    Words: 1609 - Pages: 7

  • Premium Essay

    Accounting Theory

    BAC 3684: ACCOUNTING THEORY LECTURER’S NAME: PROF PREM LAL JOSHI GROUP MEMBER’S STUDENT | STUDENT ID | DARREN TEH WE LOON | 1102702654 | CHEE YEN MUN | 1102700429 | CHANDRAPRIYA D/O GOPALACHANDRAN | 1101110492 | GAYATHIRY ULAKANATHAN | 1101110649 | a) In your opinion, why do standard setters require measurement methods other than traditional historical cost accounting? Accounting should be the most straightforward of topics

    Words: 2084 - Pages: 9

  • Premium Essay

    Accounting Theory

    other relevant materials to justify your viewpoint. INTRODUCTION Accounting can be broadly defined as the ‘measurement and communication’ of economic information to the decision makers (Watts and Zimmerman 1986). Accounting is divided into internal and external accounting on the basis of the users of the information (Spohr 2005). Spohr (2005) further highlights that the responsibility for preparing the external accounting information and publishing it lies with the managers of the firm. These

    Words: 6575 - Pages: 27

  • Premium Essay

    Accounting Theory

    From Sheet of Accounting Theory Difficulties in Segment Reporting * Base of Segmentation: in case of complex business, it’s difficult to select a base for organization as well as difficult to compare. * Allocation of Common Costs: Common costs are likely to be allocated, bringing segment information into question * Pricing Inter-segment Transaction: No specific method for inter-segment pricing, different method use for cost, cost plus market price and negotiable price. * Costs of

    Words: 1926 - Pages: 8

  • Free Essay

    Accounting Theory

    FORMULATION OF ACCOUNTING THEORY: PURPOSE AND APPROACHES A TERM PAPER (2) ON ADVANCED ACCOUNTING THEORY (ACC 821) PRESENTED BY EKERIA, Victor IKYUME, Chiahemba James OGBOLE, Philip Osemudiamen SUBMITTED TO PROFESSOR A.E. OKOYE DEPARTMENT OF ACCOUNTING COLLEGE OF BUSINESS AND MANAGEMEN SUDIES IGBINEDION UNIVERSITY, OKADA MARCH, 2015 Abstract As tasks of accounting became more difficult and focus shifted to users’ needs, a theory became necessary. Existence of a need for information for decision

    Words: 4446 - Pages: 18

  • Premium Essay

    Positive Accounting Theory

    The role of positive accounting theory. PAT has been the most significant accounting research agendas during the past four decades (Kabir). Before the arrival of PAT, normative accounting research had been the leading research tradition in accounting. Normative accounting theorists concentrated in developing accounting principles for recognition and measurement issues. In contrast with normative accounting theory which deals with “should” kind questions, PAT deals with “is” kind questions. According

    Words: 1910 - Pages: 8

  • Premium Essay

    Financial Accounting Theory

    Financial Accounting Theory Test 1: 1) Please briefly describe the essences of the following cases of accounting scandal or earnings management. (20 points) A) ENRON (8 points) * Enron created many special purpose entities (SPEs) controlled by senior Enron officers that they used in conducting off balance sheet financing * SPE’s borrowed money from banks using Enron’s stock as collateral However all of the liability was reported on the SPE’s books, not on Enron’s, even though

    Words: 1088 - Pages: 5

  • Premium Essay

    The Importance of Accounting Theory in the Field of Accounting

    The Importance of Accounting Theory to the Field Of Accounting The objective of theory is to explain and predict. One of the basic goals of the theory of a particular discipline is to have a well-defined body of knowledge that has been systematically accumulated, organized, and verified well enough to provide a frame of reference for future actions. The Webster’s definition of theory is the systematically organized knowledge, applicable in a relatively wide variety of circumstances, a

    Words: 1885 - Pages: 8

  • Premium Essay

    Accounting Theory

    ACC307 – Accounting Theory Assignment Name: Chun Ho Hui Student ID: na20150418 Case Study 1 Questions 1. Explain why principles-based standards require a conceptual framework. A: Conceptual framework can be defined as “an attempt to define the nature and purpose of accounting” (Team, 2015). Conceptual framework is essential for principle-based standards because it lays out a fundamental structure for principles-based standards. Setting the standard on and relate to an established body

    Words: 3325 - Pages: 14

  • Premium Essay

    Accounting Theory- Stakeholders

    Current Issues in Accounting, South Melbourne: Cengage Learning Freeman RE. 1984. Strategic Management: a Stakeholder Approach. Pitman: Boston, MA Haigh, N., & Griffiths, A. (2009). The natural environment as a primary stakeholder: The case of climate change. Business Strategy and the Environment, 18(6), 347. Retrieved from: http://ezproxy.waikato.ac.nz/login?url=http://search.proquest.com/docview/213770085?accountid=1728 Mitchell RK, Agle BR, Wood DJ. 1997. Toward a theory of stakeholder identification

    Words: 1220 - Pages: 5

  • Premium Essay

    Positive Accounting Theory

    Critical Perspectives on Accounting (1996) 7 , 409 – 435 RECONSIDERING THE ‘‘SOCIAL’’ IN POSITIVE ACCOUNTING THEORY: THE CASE OF SITE RESTORATION COSTS DEAN NEU AND CYNTHIA SIMMONS University of Calgary This paper seeks to challenge the hegemony of positive accounting theory explanations of managerial behaviour. We argue that the decontextualized perspective of positive accounting theory is limiting and that changing the perspective offers a more complete explanation of behaviour. Starting

    Words: 13164 - Pages: 53

  • Premium Essay

    Positive Accounting Theory

    Chapter 7 - Positive Theory Positive Accounting Theory Philosophy of PAT Million Friedman championed positive theories in economics. He stated that: (part 3 Empirical Research in Accounts of Accounting theory from Jayne Godfrey) The ultimate goal of positive science (i.e. INDUCTIVE) is • The development of a ‘theory ‘ or ‘hypothesis’; • that yields valid and meaningful “Predictions’ • about phenomena not yet “observed”. Consistent with Friedman’s view, Watts and Zimmerman

    Words: 2421 - Pages: 10

  • Premium Essay

    Accounting Theory Is Useful

    Introduction The usefulness of accounting theory is evident at various levels within the accounting profession and society in general including, standard setters, accounting professionals and users of accounting information. This essay will address two key areas, firstly, a personal reflection on this course and why studying theory is essential for practicing accountants. The second part is a critical evaluation of the conceptual framework and why it is an essential part of accounting literature. Areas evaluated

    Words: 3910 - Pages: 16

  • Free Essay

    Accounting Theory

    critical theorists assess research based on the Positive Accounting Theory? Accounting researchers tend to accept current accounting systems. Rather than focusing on why accounting systems favour certain classes of society, research is mainly carried out to such things as what accounting methods are most appropriate in certain circumstances, what motivates managers to use one accounting method over another and disclosure. By looking at accounting with a critical perspective is to recognise the way in

    Words: 454 - Pages: 2

  • Premium Essay

    Accounting Theory

    Accounting Insights Accounting for leases: Change is coming. By Matthew Rodgers and Peter McElwain, Baker Tilly September 21, 2010 Leasing of equipment, real estate, and other assets has been and continues to be a significant source of financing for businesses in all industries. As a result, the financial reporting rules for the treatment of lease transactions can be significant to the financial statements and the business operations of lessees and lessors alike. The Financial Accounting

    Words: 4749 - Pages: 19

  • Free Essay

    Accounting Theory

    1. Introduction Accounting practices have been argued to reflect information quality of the firm in the market. Recently, there has been renewed interest in the relation between information asymmetry and conservative financial reporting practices. Many theorists have critiqued this aspect of information asymmetry, which has garnered significant interest in the accounting arena in the world today. This paper is set out to analyze the literature on conservative financial reporting, dissecting Akerlof’s

    Words: 3303 - Pages: 14

  • Premium Essay

    Positive Accounting Theory

    implied by the positive accounting theory that managers base decisions based on personal or organizational objectives such as higher compensation or increased implementation of corporate governance procedures (Mattessich 2007). The two standard setting bodies try to implement policies in order to ensure better reliability and transparency of financial statements relevant to specific managers applying these standards. The two bodies set standards to improve accounting practice in their respective

    Words: 257 - Pages: 2

  • Premium Essay

    Answer to Financial Accounting Theory

    33 Note: This question illustrates another aspect of dividend irrelevancy--given a dividend policy, the value of the firm is the same whether it is based on dividends or cash flows. A related illustration is given in the outline of clean surplus theory in Section 6.5.1. The only difference between that illustration and this question is that here valuation is as at time 0, whereas in Section 6.5.1 valuation is as at time 1. 6. a. The expected value of a single roll of a fair die is: x 1 6

    Words: 9627 - Pages: 39

+
-