Question

Why is it useful for students of accounting to consider accounting theories?

Answer 1

Accounting theory necessary and useful for accounting students:-

Accounting theory may also be used to explain existing practices to obtain a better understanding of them. But the most important goal of accounting theory should be to provide a coherent set of logical principles that form the general frame of reference for the evaluation and development of sound accounting practices. Accounting theories provide both the theoretical basis and the rules based on that theoretical basis used to guide accountants in creating useful financial documents. If accounting methods and practices can be considered the meat of accounting, then accounting theories are the bones that lend them shape and structure.

Accounting theory, as regulatory standards evolve, also helps develop new accounting practices and procedures. Accounting theory is more qualitative than quantitative, in that it is a guide for effective accounting and financial reporting. The most important aspect of accounting theory is usefulness.

Accounting theories and rules based on accounting theories are useful because their creation and implementation ensure that these factors are promoted in accounting methods and practices. Financial documents that cannot provide accurate and consistent information in time for financial decisions to be made are useless and pointless.