Question

CONDUCT APPLIED RESEARCH ON ACCOUNTING THEORY AND THE RELEVANCE TO FINANCIAL REPORTING

Answer 1

ACCOUNTING THEORY-

DEFINITION- Accounting theory refers to set of frameworks, methods and assumptions which are used in study and application to financial reporting.

Accounting theory is basically various assumptions and studies related to "how financial reporting is to be done".It is basically a branch of accounting which consists of varous methods and principals.

Accounting theory has various branches and these theories give a framework for financial reporting. These theories try to explain with logic behind a particualr activity. Like generally accepted accounting principles (GAAP) are accepted world wide for this reason only that helps to find a logical reason behind a particular activity.

FINANCIAL REPORTING-

It is disclosure of monetary results of the company to all of it's stakeholders. These disclosures are given for a particular period and genrally this period is 1 year.

RELEVANCE OF ACCOUNTING THEORIES ON FINANCIAL REPORTING.

*Accounting theories form the base for financial reporting.

*Theory and practical can not be divorced. Accounting theory is basically theory of financial reporting.

* Accounting theory provides the necessary prerequisites for financial reporting.

* Accounting theory provides a framework for the FINANCIAL REPORTING.

AT LAST, ACCOUNTING THEORY IS NOT JUST A PATH BUT ALSO A DIRECTION TO FINANCIAL REPORTING.