If it is to be easy to understand and reliable, it must be accounted for according to specific rules and regulations. If everyone uses their own grammar and vocabulary, it will be a messy Babylonian ratio - no one will understand anyone else. Similarly, accounting must be used in accordance with generally accepted rules.
The first prerequisite is that the accountant should agree or comply with the basic facts of the operation of our economic system; current economic and business practices as well as applicable laws embodied in legislative or common law. Therefore, it is important to maintain consistency in accounting practice; in other words, in the accounting process, everyone must deal with the specific situations that may be encountered in exactly the same way.
Accounting theory creates a framework to ensure that accounting practices meet the requirements of consistency and consistency. The theory is embodied in a set of principles, policies, methods, procedures and practices. The scope and complexity of our economic system is constantly increasing, and we need to adapt the accounting process to record relevant information about economic activities. Everyone involved in accounting must understand this adaptation process; moreover, the prerequisite for this understanding is not only to master accounting theory, but also to master the structure of the theory.
Accounting theory is based on a series of basic economic truths of a dual nature. First, accounting theory is based on generally accepted proposals in a particular socioeconomic order. For example, consider the concept of personal ownership: the principle that is generally accepted in our society is that everyone owns the exclusive right of the item - they are his personal property and not the property of others. This concept is a basic economic fact.
Second, basic economic facts have characteristics similar to those of natural law, that is, specific causes have specific consequences. For example, if someone gets a value from a transaction that is higher than the value of the exchange, then his net worth - his wealth - will increase the remaining amount. This is also a basic economic fact. These economic truths are described as concepts and assumptions. A concept is a generally accepted view of a particular phenomenon, which is described in specific terms. Hypothesis is a generally accepted assumption or assumption of a particular condition or phenomenon that is the basis for the development of principles.
In the development of accounting theory, concepts and assumptions are expressed as basic facts or propositions on which the theory is based. They do not attempt to dictate the operation of the accounting process, but rather the basis on which the accounting structure is based.
Orignal From: The origin of accounting theory
No comments:
Post a Comment