overview of accounting theory

INTRODUCTION ACCOUNTING THEORY Tang Tri Hung, PhD Course Targets  To provide the fundamental knowledge for students about accounting theory of which they can gain the understand and be able to apply the approaches, measurements, compare the theoretical framework to analyze and come to evaluate an accounting system;  To supply students with an overview of the international accounting system in each historical stage of establishment, development and international integration trend in accounting. Recommended texts  Vu Huu Duc – The Fundamental Problems in Accounting Theory – Labor Publisher (2010);  Ministry of Finance – Vietnamese Accounting Standards (VAS);  IASB, Framework for the Preparation and Presentation of Financial Statement, was approved by the IASC Board in April 1989 for publication in July 1989, and adopted by the IASB in April 2001.  Other documents given by the lecturer during the course. Assessment Standards  The midterm test 2 x 0,2 = 0,4 (essays in groups/constructed response test)  The final test 0,6 (constructed response test)  Total: 1,0  Band score: 10 Course Timetable Chapter Content Total Theory Discus -sion 1 OVERVIEW OFACCOUNTING THEORY 6 4 2 2 THEORETICAL FRAMEWORK OF ACCOUNTING 8 4 4 3 EVALUATING TEMPLATES IN ACCOUNTING 8 4 4 4 INTERNATIONALACCOUNTING 8 4 4 ACCOUNTING THEORY OVERVIEW Tang Tri Hung, PhD Targets  After finishing this chapter, the students will be able to: – Understand the cognitive processes and the different conceptions about accounting, especially in accounting theories. – Explain the development of modern accounting and the trends controlling this development. Contents  Development history of accounting theory  Conceptions about the nature of accounting  Theoretical framework and accounting theory  Applications DEVELOPMENT HISTORY OF ACCOUNTING THEORY  The Pre-theoretical period  The Basically Scientific period  The Normative period  The Positive period  The Modern period THE PRE-THEORETICAL PERIOD  This stage began to exist from the time when the primary kinds of accounting were established to the end of the 18 th century.  Accounting had existed under the recording ways to support business and financial operations before the double entry accounting system was founded in the 15 th century.  In 1494, the double entry accounting system that was introduced by Luca Pacioli in ―Summa de Arithmetia, Geometria, Proportioni et Proportionalita‖ played an important role in developing the modern accounting. [...]... courses of action.‖ (Accounting Principles Board- 1970) WHAT IS ACCOUNTING?  Accounting is the activities of collection, processing, testing, analyzing, and providing economic and financial information in the form of value, matters, and labor time (Vietnamese Accounting Laws, 2003) WHAT IS ACCOUNTING?  The – – – debates: What are the scope of accounting? What are the objectives of accounting? Is accounting. .. that the accounting ideas have reached for the level of maturity in science WHAT IS ACCOUNTING?  Accounting is the art of recording, classifying and summarizing in a significant manner and in terms of money, transactions and events which are, in part at least, of a financial character and interpreting the results thereof‖ (Committee on Terminology of AICPA - 1953) WHAT IS ACCOUNTING?  Accounting. .. theoretic accounting structure as a theoretical framework about accounting Starting from the definitions of the nature, the meaning of accounting, and researches to find out the aims of accounting to create the accounting principles These researches are considered as the basis for developing the theoretical accounting patterns of FASB and IASC in later THE NORMATIVE PERIOD  Some studies in the trend of. .. the previous accounting books, regulations and adjudications of related laws, and financial statements… in the purpose of ― creating a series of helpful accounting principles to clarify and improve accounting tasks at companies and financial statements issued in public THE NORMATIVE PERIOD   By the late of the 1960s, according to the application of economics to accounting, the regulatory accounting. .. example, there were more focuses on the ways of choosing the accounting policies rather than the accounting methods themselves In 1980s, another approach developed in researching was studying on behavioral accounting theory The behavioral researches considered the affects of accounting numbers on a larger social scale and the reactions of each sides to accounting information, including investors, managements,... – – The studies of regulatory accounting principles such as ―The basic assumptions about the nature of accounting by Mootnitz in 1961, ― The orientation for the accounting principles applied in companies‖ by Mootnitz and T Spouse in 1962 The studies of corporate profit and assumptions such as Accounting, evaluation and economic behaviors‖ by Chambers in 1966; ― Measurement basis in accounting by... important one in this area was ― Practically evaluating about the number of profit in accounting by Ball and Brown (1968) (2) Management’s selection of the accounting policy to consider the ways managements choose the accounting principles for presenting financial statements; for example, ―The effects of awarding plans on the selection of accounting policies‖ by Healy in 1985 THE POSITIVE PERIOD  The recognizing... present accounting researches in the academic field After the collapses of big companies (WorldCom, Enron,…) and the financial crisis in the early 21st century, the issues of basic accounting have been discussed again and the normative theories are strongly supported The majority of these studies were conducted by both the accounting organizations and the professional people working in the accounting. .. trend of regulation were formed since 1940s such as ― The introduction of corporate accounting principles‖, A.C Littleton and W.A Paton It was the first set of developed accounting principles that based on the interpretation instead of using the induction of reality Two researchers who clearly distinguished accounting principles with accounting methods are the first ones to recognize their relation THE... the formation of professional accountancy These organizations make contributions to the improvement of the initial accounting theory like: – – In 1936, American Accounting Association (AAA) published ―The announcement orienting the accounting principles for financial statements‖ In1938, American Institute of Certified Practising Accountants – AICPA issued ―A statement about the accounting principles‖ . Timetable Chapter Content Total Theory Discus -sion 1 OVERVIEW OFACCOUNTING THEORY 6 4 2 2 THEORETICAL FRAMEWORK OF ACCOUNTING 8 4 4 3 EVALUATING TEMPLATES IN ACCOUNTING 8 4 4 4 INTERNATIONALACCOUNTING 8 4 4 ACCOUNTING THEORY OVERVIEW Tang. accounting theory  Conceptions about the nature of accounting  Theoretical framework and accounting theory  Applications DEVELOPMENT HISTORY OF ACCOUNTING THEORY  The Pre-theoretical period  The. accounting, especially in accounting theories. – Explain the development of modern accounting and the trends controlling this development. Contents  Development history of accounting theory  Conceptions