Do you have any criticisms of historical cost accounting

Assignment Help Accounting Basics

Reference no: EM132934364

Question 1. Researchers who develop positive theories and researchers who develop normative theories often do not share the same views about the roles of their respective approaches to theory construction.
(a) How do positive and normative theories differ?
(b) Can positive theories assist normative theories, or vice versa? If yes, give an example. If not, why not?

Question 2. Classify the following hypotheses according to whether they are conclusions of positive or normative theories. Explain your answers.
(a) Historical cost accounting should be replaced by a market value system.
(b) Historical cost accounting provides information used by creditors.
(c) Historical cost accounting is used by many managers to allocate costs in determining divisional performance.

Question 3. Give an example of an accounting convention usually adopted in historical cost accounting. Conventions govern the way accounting is practised, and conventions are, by definition, known from practice.
(a) What theoretical approach is used to derive conventions?
(b) What does your answer to (a) imply about the potential for accounting
theories based on conventions to be innovative in providing useful
information?

Question 4. What type of a theory is historical cost? How has it been derived? Do you have any criticisms of historical cost accounting?

Question 5. How do you think massive amounts of data now available from information technologies will affect
(a) the development of accounting theories
(b) the testing of accounting theories

Question 6. One type of theory construction involves observing the practices and techniques of working accountants and then teaching those practices and techniques to successive accountants.

(a) What type of theory construction is this?

(b) What are the advantages of this approach compared with a decision-usefulness approach to theory construction?

(c) What are the disadvantages of this approach?

(d) Do you believe that this is a good approach to developing a theory of accounting? Why or why not?

Reference no: EM132934364

Questions Cloud

Which the operating cash flow decreases when : Which the operating cash flow decreases when? cash is used to reduce accounts payable./ new shares of stock are sold for cash.

What is the percentage change : What is the percentage change from 2020 to 2021? What is the percentage change from 2021 to 2022? Be sure to indicate whether the percentage change.

Make the appropriate journal entries from the purchase : Assume no significant influence was acquired. Prepare the appropriate journal entries from the purchase through the end of the year.

Find what should be done to reconcile the bank statement : Bank inadvertently charged JBR bank account for RST company's bank fees. What should be done to reconcile the bank statement?

Do you have any criticisms of historical cost accounting : Develop normative theories often do not share the same views about the roles of their respective approaches to theory construction

Describe an accounting regulation : How might institutional theory explain accounting disclosures and How can positive accounting theory explain corporate social and environmental reporting

What should be done to reconcile the bank statement : The bank collected a Note Receivable for the company and credited the company's bank account. What should be done to reconcile the bank statement?

Preparation of bank reconciliation helps in identification : Preparation of bank reconciliation helps in the identification of __________ in the accounting records of the company or the bank.

Analyze the foregoing transactions using tabular arrangement : Analyze the foregoing transactions using the following tabular arrangement. Insert the number of each transaction in the Item space and insert the amounts

User Account

All Pages