"Does not provide prescription and therefore does not provide a means of improving accounting practice" (Deegan 2005, p99). - resulting in the alienation of practising Accountants. It is not value-free as it asserts, but is value laden. Wealth maximization assumption is too negative and "morally bankrupt) (Gray et al 1996, p75). Theory has not developed much since 1970's - this limits the potential accomplishments of the theory. The three hypotheses, the debit hypothesis, the bonus-plan hypothesis and the political cost hypothesis are scientifically flawed, as all are often not supported by research but rather are falsified, and should be rejected from a scientific point of view (Christenson 1983).
Public interest theory of accounting is concerned with achieving publicly desired results which, if left to the market, would not be obtained. The main galvanizer of Public Interest theory is to respond to the demands from the general public in regards to correcting market inefficiencies (i.e. accounting inconsistencies between firms). However, it is difficult to meet demands from all people because competition between demanders is not formally acknowledged by the regulator. what is private interest theory then?
In accounting there are four main areas. They are as follows corporate accounting, corporate finance, public accounting and investment banking.
The 5 major functions of accounting are recording, classification, analysis and Interprets, Communication and Summarizing. These functions defines the accounting profession.
1 - Perpetual inventory system 2 -Periodic accounting system
The main objective of Accounting concepts is to maintain uniformity and consistency in accounting records. These concepts constitute the very basis of accounting. All the concepts have been developed over the years from experience and thus they are universally accepted rules.
The main criticism is that the theory does not apply to all students. It is also not a theory that is well taken by many teachers.
educate and evaluate
inflexible
Public interest theory of accounting is concerned with achieving publicly desired results which, if left to the market, would not be obtained. The main galvanizer of Public Interest theory is to respond to the demands from the general public in regards to correcting market inefficiencies (i.e. accounting inconsistencies between firms). However, it is difficult to meet demands from all people because competition between demanders is not formally acknowledged by the regulator.
Criticisms of the CPI All the criticisms of the CPI arise from the fact that it is a fixed weight basket. The three main criticisms are given below: 1. The CPI suffers from a substitution bias. 2. The CPI does not include new products. 3. The CPI does not include quality changes.
Public interest theory of accounting is concerned with achieving publicly desired results which, if left to the market, would not be obtained. The main galvanizer of Public Interest theory is to respond to the demands from the general public in regards to correcting market inefficiencies (i.e. accounting inconsistencies between firms). However, it is difficult to meet demands from all people because competition between demanders is not formally acknowledged by the regulator. what is private interest theory then?
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In accounting there are four main areas. They are as follows corporate accounting, corporate finance, public accounting and investment banking.
whats the main words of accounting
He was Hitler's uncle. He drove a gay car.
Accounting theory examines practical and theoretical issues in accounting practices such as historical costs, decision usefulness, portfolio risk, fair-value-oriented standards and executive management compensation and earnings. In addition, it also discusses economic and political issues and criteria related to accounting practices required by accounting governing bodies such as Canadian Institute of Chartered Accountant (CICA), Financial Accounting Standards Board (FASB) and International Accounting Standards Board (IASB). The first goal of accounting theory is to describe and explore various theories that underlie financial accounting and reporting. The second goal is to explain and illustrate the relevance of these theories in order to understand the practice of accounting and reporting. Some of the main theories are based on economics and finance. For instance, by discounting future cash flows to present time, the present value model enables a theoretically correct basis of asset and liability valuation and income measurement of a firm. Thus, the present value model provides a benchmark to guide accounting practice. From a finance stand point, portfolio and efficient market theory are used in accounting practices in understanding how investors make rational investment decisions and how they use financial accounting information to make their decisions. Accountants can then prepare financial statements that are of greatest use to investors. To put in a nutshell, accounting theory helps to understand the impact of complex ideas and regulations on financial reporting and the interpretation of information generated by financial reporting at the conceptual level.
Most of the people do not know the rules of Debit and Credit. That is the main problem in accounting.