Accounting Theory Construction.docx

Which has been described as the golden age of

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which has been described as the ‘golden age’ of normative research, focused on either on deriving ‘true income’ (profit) for an accounting period or on discussing the type of accounting information which would be useful in making economic decisions (decision-usefulness). True income theorist concentrated on deriving a single measure for assets and a unique (and correct) profit figure. On the other hand, the decision usefulness approach assumes that the basic objective of accounting is to aid the decision making process of certain ‘users’ of accounting reports by providing useful or relevant accounting data. Positive theories Positivism or empiricism means testing or relating accounting hypotheses or theories back to experiences or facts of the real world. Positive accounting research first focused on empirically testing some of the assumptions made by the normative accounting theorists. Today, however, the greater amount of positive theory is concerned mainly with ‘explaining’ the reason for current practice and predicting the role of accounting and associated information in the economic decisions of individuals, firms and other parties that contribute to the operation of the market place and the economy. Source :
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