Introduction
Accounting theory has experienced rapid changes and innovations in recent years. These changes are classified as new accounting theories. These innovations and new theories run counter to traditional accounting theories. There are gaps in the financial status of different companies. Coordinating these two methods will bring greater stability to the business.
Traditional method
According to Ahmed [2000], "Accounting history is the study of the evolution of accounting ideas, practices, and institutions to respond to changes in environmental and social needs." Older accounting styles respond to past experiences and provide us with the latest Reasons. These are the five methods that make up the traditional theory.
Non-theoretical method
According to accounting theory, as a tool to strengthen the international coordination of accounting standards, "non-theoretical accounting methods are pragmatic [or practical] methods and authoritarian methods." These methods are used to perform a given task using known science. The core of this theory is based on the theory that accounting theory must follow the end-use provisions of financial reporting. This means that any other theory without these characteristics is considered bad.
Deductive method
The deductive method is trying to find something that should be. According to Porwal [2001], the four steps of using deductive methods are
• Specify goals for financial statements
from
• Choose the "hypothesis" of accounting
from
• Deriving accounting "principles"
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• Develop accounting "technology"
Moral method
The ethical approach is to equate the authenticity and transparency of the accounting framework with all other aspects. This means that accounting methods may not be identified or implied to help a party, but it must be fair. This approach is also centered on fairness, which includes the ethics and integrity of the business.
Sociological method
The sociological approach focuses on the sociological impact of accounting. This is related to the general well-being of the public; and the equality that accounting should bring to the world. In order to achieve this, "established social values" must be used in the implementation of accounting theory.
Economic method
The economics of accounting theory differs from the sociological and ethical methods because it is based on general economic well-being. This means that choices will be made based on a country's overall economic goals. This is more about individual equality, mainly macroeconomic factors.
new method
In recent years, new accounting methods are being developed and transformed, which is crucial for modern accounting. The parties in the accounting profession have not yet accepted the new theory. These five methods are the basis of the new theory.
Consulting customer
A major aspect of accounting theory is to provide advice to clients. Accountants must be able to guide clients to make better decisions when changing companies. For example, according to LS Porwal's Accounting Theory 3E, "Customers who consider manufacturing and accounting changes will increase their reported income to support their stock prices, and should be told that this strategy will not deceive the market." This shows that the accountant is working for the company. The role of future actions to be taken will be to ensure their financial status.
Behavioral method
Although often excluded from traditional accounting processes, behavioral methods are based on people's opinions and reactions. This means quantifying the reactions of people and financial statement users.
Human information processing method
The manual information processing method is based on processing model inputs, processes, and outputs. These three tools allow accounting methods to be used for other general real-world problems.
method of prediction
According to FASB's Concept Statement No. 2, the predicted value is a relevant factor and the main quality of financial reporting. This method is an assessment of the different options and the choice between different options.
Orignal From: Coordination between tradition and new accounting theory
According to one transaction cost theory, transaction cost economics to economizing the costs rather than strategizing. Outsourcing of tasks and accounting process is a rising popular trend in the accounting BPO. Most of the accounting professionals believe in doing less hard work and usage of technology more to ease up their work. It helps in accelerating productivity without having to incur extra employee costs like payroll, taxation, and health benefits.
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