Accounting Theory Essays

Accounting Theory Essays Accounting Theory Essay Accounting Theory Essay Accounting Theory Construction The function to study accounting theories is to classify them according to the assumptions they rely on, how they were formulated, and their approaches to explaining and predicting actual events. There are some classification which are pragmatic, syntactic, semantic, normative, positive, and naturalistic approaches. Pragmatic approaches are based on observing the behavior of accountants or those who use the information generated by accountant. Syntactic approaches rely on logical argument, based on a set of premises. Semantic approaches concern how theories correspond to real-world events. Normative theories rely on both semantic and syntactic approaches. Positive approaches test hypotheses against actual event . Positive approaches test hypotheses against actual and the last is Naturalistic approaches consider individual cases and do not try to generalise. PRAGMATIC THEORIES Descriptive Pragmatic Approach Descriptive pragmatic approach based on continual observation of the behavior of accountants, a theory can be developed from observations of how accountants act in certain situations. The theory can be tested by observing whether accountant do act in the way the theory suggest. This approach is probably the oldest and most universally used method of accounting theory construction. Criticisms of descriptive pragmatic approach: * does not consider the quality of an accountant’s action * does not provide for accounting practices to be challenged * focuses on accountants’ behaviour not on measuring the attributes of the firm Psychological Pragmatic Approach Differetnt with Descriptive pragmatic approach, this approach require theorist to observe users responses to the accountants output ( ex:financial report). There are also some problem with this psychological approach that are : * some users may react in an illogical manner * some users might have a preconditioned response * some users may not react when they should SYNTATIC AND SEMANTIC THEORIES Semantic inputs of the system are the transactions and exchanges recorded in the vouchers, journals, and ledgers of the business. These are then manipulated on basis of the premises and assumptions of historical cost accounting. Some accounting theorists are critical, they argue that the theory has semantic content only on the basis of its inputs. There is no independent empirical operation to verify the calculated outputs for examples, ‘profit’ or ‘total asset’. Historical cost accounting has also been criticised on the basis of its syntactic element, for example with respect to the practice of summing several different money amounts assigned to specific assets In defence of the historical cost system, accountants argue that there is no requirement that accounting outputs should have any semantic content or be subject to falsification rules. NORMATIVE THEORIES The 1950s and 1960s saw what has been described as the ‘golden age’ of normative accounting research. Accounting researches become more concerned with policy recommendation and with what should be done, rather than with analysing and explaining the currently accepted practice. Normative theories concentrated either on deriving the ‘true income’ for an accounting period. True income : true income theorists concentrated on deriving a single measure for assets and a unique profit figure. Decision usefulness ; the decision usefulness approach assumes that the basic objective of accounting is to aid the decision making process of certain ‘users’ of accounting reports by providing useful, or relevant, accounting data. The normative theories of the 1950s and 1960s began with a statement of the domain (scope) and objectives of accounting, the assumptions underlying the system and definitions of all the key concepts. POSITIVE THEORIES During the 1970s, accounting theory saw a move back to empirical methodology, which is often referred to as positive methodology. Positivism or empiricism means testing or relating accounting hypotheses or theories back to experiences or facts of the real world. The main different between normative and positive theories is that normative theories are prescriptive, whereas positive theories are descriptive, explanatory or predictive. DIFFERENT PERSPECTIVES Focused on what may be considered to be a highly structured approach to theory formulation – the scientific approach. This approach has an inherent assumption that the world to be researched is an objectives reality capable of examination in terms of large scale or average statistics. This type of research is carried out by incremental hypotheses which are then combined to provide greater understanding, or better predictions of accounting. The implied assumption is that a good theory holds under circumstances that are constant across firms, industries and time. The criticism of the scientific method are the large-scale statistical research tends to lump everything together and it is conducted in environments that are often remote from the world of or the concerns of accountants. SCIENTIFIC APPROACH APPLIED TO ACCOUNTING A great deal of misunderstanding exists about the attempt to apply a scientific approach to accounting. The attempt is to make scientists out of accounting practitioners. Accountants who believe in a scientific approach want empirical evidence and logical explanation to support accounting practices so that practitioners can recommend the most appropriate methods for given situation based on this evidence. Another common misunderstanding about the application of the scientific view in accounting is that ‘absolute truth’ is desired, which of course is not possible. ISSUES FOR AUDITING THEORY CONSTRUCTION Auditing is a verification process that is applied to the accounting inputs and processes. Auditor provide an opinion on whether the financial statements are in accordance with the applicable reporting framework, and also provide on whether the statements present fairly, in all material respects, or give a true and fair view. The normative era of accounting theory and research also coincided with a normative approach to auditing theory. The positive ere of accounting has led to a positive approach to auditing theory

Comparative Advantage Essays

Comparative Advantage Essays Comparative Advantage Essay Comparative Advantage Essay I have chosen the Comparative Advantage Theory for my key term to discuss. I chose this term because it has a great importance on world trade clearly help shape the pattern of world trade, and also to get a better understanding of the concept. Comparative Advantage is the benefit or advantage of an economy to be able to produce a commodity at a lesser opportunity cost. According to Stalemate (2009), opportunity cost is the value of what had to be given up, or forgone, to consume or achieve the object. This term simply meaner, countries should specialize in a certain lass of products for export, but import the rest of product even if the country holds an absolute advantage in all products. The scholarly article I chose this week to discuss is, State should target sectors where the country industry has a comparative advantage written by T. T Ram Moan. The article talks about Justine Hussy Lines book titled The Quest for Prosperity. The book attempts to give solutions to the world financial crisis. In the article he talks about Lines distinguishes between advanced nations and developing ones in the short-run, and how money stimulus ill be effective for developing nations and not advanced nations, and also discuses Lines perspectives for Long-term growth. According to the article, government must identify the right growth sectors and support investment in those sectors, because it will lead to the overall growth in that economy. A key example is what Singapore did in the sasss when they focused on specialty chemicals that resulted in drawing developed nations into their economy (Moan, 2012). This seems pretty easy but has failed in many nations because it is hard to sometimes identify the sectors that truly eve Comparative Advantage in an economy. The theory encourages nations to engage in true free trade and to specialize in areas where they can be very effective and efficient at lower cost, instead of looking to bolster weak industries from foreign competition by imposing protective tariffs that otherwise stifle the production that leads to overall gains in wealth. Even though this theory has a huge advantage on global trade, it does have its flaws, which includes the following: It may overstate the benefits of specialization by ignoring certain costs. These costs include transport costs and any external costs associated with trade, such as air and sea pollution. Also it does not take into account relative prices and exchange rates, and also assumes perfect mobility of factors without any diminishing returns. Furthermore, complete specialization might create structural unemployment as some workers cannot transfer from one sector to another.

An exploratory, descriptive study to assess the effectiveness of Error Dissertation

An exploratory, descriptive study to assess the effectiveness of Error reporting on Nursing Errors in Operating Rooms - Dissertation Example The following are a few of these considerations: 1. Nurses’ scope of practice, and adverse outcome of patients There has been considerable attention devoted to nurses’ errors in the operating room; the significance of reporting mechanisms has been underscored as an important instrument in developing error prevention measures in operating room procedures, and health care in general. Espin (2007) examined the implications of such errors as encountered in individual practice. Empirical studies have established that nurses’ preferences in reporting errors were generally confined to the perceived scope of their practice; where reports went beyond these boundaries, the reports were rationalized in the context of the patient’s unfavourable outcome. Through survey and qualitative analysis, it was determined that nurses’ perceived scope of practice was a major factor in their reporting preferences, and the seriousness of the outcome to the patient was only s econdary. The findings support the observation that nurses tend to be selective in their reporting; these have negative implications, according to Espin, as many errors will likely remain unreported where they do no fall within the nurses’ scope of practice, or where the negative repercussion to the patient is not perceived as compelling. 2. Nature of the error reduced by error reporting Partly due to the normal course of modernization in health care and partly due to the need to meet global standards, similar efforts to improve nurses’ error reporting have been pursued in different countries. In Korea, a study sought to develop and evaluate an error reporting promoting program (ERPP) with the aim of reducing the incidence rate of nursing errors in operating rooms (Kim, et al., 2007). This quasi-experimental study registered a drop in incidence rates from 28.4% to 15.7% for the experimental group upon whom ERPP was administered, representing a significant decrease in t he areas of â€Å"compliance of aseptic technique†, â€Å"management of document†, and â€Å"environmental management,† but has little effect in â€Å"habit-related†, â€Å"knowledge-based† and â€Å"multidimensional† nursing activities. The ERPP was thus adjudged effective in reducing incidences of certain types of nursing errors in the operating room. 3. Organizational and management factors A serious inquiry into aspects of errors committed by health professionals must necessarily seek the underlying human factors that give rise to errors, and that compromise the reporting thereof. It is premised on the principle that humans are so intrinsically predisposed to error that it is inherently biologic (D’Addessi, Bonglovanni, Volpe, Pinto and Bassi, 2009). However, surgery stands apart in that surgical error is commonly presumed to be caused by the lack of skill or ability, and the result of negligent actions. After all, in many instanc es, technical operative errors, whether committed by nurses or other OR personnel present, tend to cause surgical morbidity and affect adversely the patient’s outcome (Cuschieri, 2005). Additionally, however, the operating theatre is comprised of a unique and complex set of team dynamics –