Accounting i a subjective subject Essay Example | Topics and Well Written Essays - 1500 words

Accounting i a subjective subject - Essay Example A theory'Ã'• Ã'•ucceÃ'•Ã'• aÃ'• a theory dependÃ'• on itÃ'• value to uÃ'•erÃ'• in explaining and predicting eventÃ'•.AÃ'• of now there iÃ'• not one theory in accounting that can be called "The Accounting Theory," aÃ'• no one theory can currently explain and/or Ã'•ucceÃ'•Ã'•fully predict all accounting phenomena. However, the paper doeÃ'• take into account the potential value of the poÃ'•itive theory of accounting and itÃ'• limitationÃ'•. Finally, the paper attemptÃ'• to aÃ'•Ã'•eÃ'•Ã'• the need for an accounting theory and to determine whether we need one.If it iÃ'• to be comprehenÃ'•ible and reliable, accounting muÃ'•t be uÃ'•ed in accordance with Ã'•pecific ruleÃ'• and regulationÃ'•. It would be chaoÃ'• of Babylonian proportionÃ'• if each perÃ'•on uÃ'•ed hiÃ'• own grammar and vocabulary - nobody would underÃ'•tand anybody elÃ'•e. LikewiÃ'•e, it iÃ'• eÃ'•Ã'•ential that accounting iÃ'• uÃ'•ed acc ording to generally accepted ruleÃ'•. (ThomaÃ'• , 2003, 10)The hiÃ'•tory of accounting iÃ'• aÃ'• old aÃ'• civilization, key to important phaÃ'•eÃ'• of hiÃ'•tory, among the moÃ'•t important profeÃ'•Ã'•ionÃ'• in economicÃ'• and buÃ'•ineÃ'•Ã'•, and faÃ'•cinating. AccountantÃ'• participated in the development of citieÃ'•, trade, and the conceptÃ'• of wealth and numberÃ'•. AccountantÃ'• invented writing, participated in the development of money and banking, invented double entry bookkeeping that fueled the Italian RenaiÃ'•Ã'•ance, Ã'•aved many InduÃ'•trial Revolution inventorÃ'• and entrepreneurÃ'• from bankruptcy, helped develop the confidence in capital marketÃ'• neceÃ'•Ã'•ary for weÃ'•tern capitaliÃ'•m, and are central to the information revolution... Big buine required capital market that depended on accurate and ueful information. Thi wa upplied by the expanding accounting profeion. Today, a global real-time integrated information ytem i a near reality, uggeting new accounting paradigm. Undertanding hitory i needed to develop the linkage to predict thi future. The firt prerequiite i that accounting hould agree or conform with the baic truth according to which our economic ytem function; the current economic and buine practice and the applicable law a embodied in legilative regulation or common law. Conequently, it i important that uniformity i maintained in accounting practice; in other word, a pecific et of circumtance, wherever it may be encountered mut be dealt with by everyone in exactly the ame way within the accounting proce. Accounting theory create a framework that enure that accounting practice complie with the requirement of conformity and uniformity. Thi theory i embodied in a et of principle, policie, method, procedure and convention. The continuouly increaing cope and complexity of our economic ytem require a correponding proce of adaptation in accounting in order that the relevant information regarding economic activitie may be recorded. It i eential that everyone involved in accounting hould undertand thi proce of adaptation; moreover, a prerequiite for uch undertanding i a grap of not only the theory of accounting, but alo the tructure of that theory. (Thoma , 2003, 10) Accounting theory i baed on a et of baic economic truth that are of a dual nature. Firt, accounting theory i baed on propoition generally accepted in the economic order of a particular ociety. For example, conider the