Question

QUESTION 1

1. Explain how theories of accounting enhance your ability to be a critical thinker and differentiate you from an average accountant.                                                                                      
2. Explain the philosophical foundations and main arguments of critical accounting research.                                                                                                                                                                                                                                                                                                                                    

Question 2         

(a)    Describe the basic features of positive and normative theories of accounting. Give examples of these theories.                                                                                                                      (3 marks)

(b)   Differentiate Positive Accounting Theory (PAT) from other positive theories of accounting.

                                                                                                                                                                         (5 marks)

(c) Which theories have origin in the political economy theories?                                     (2 marks)                        

     

Question 3         

1. Describe the development of accounting regulation in the USA in the 1930s.         
2. Discuss the perspective and nature of collaboration between the IASB and FASB in relation to the development of conceptual framework for financial reporting.                                   
3. Identify and explain an accounting theory that considers that regulation is put in place to benefit society.                                                                                                                                   

       Question 4

(a)    What are the fundamental principles of measurement in accounting? Describe how an organisation can enhance the faithfulness of information.                                            

(b) Distinguish between current purchasing power accounting, current cost accounting, and continuously contemporary accounting.                                                                                 

               

Question 5        

1. Explain the relationships between various reporting concepts in relation to disclosure of corporate economic, social and environmental performance.                              
2. Briefly explain the limitations of traditional financial accounting with respect to disclosure of corporate social and environmental performance.                                                              
3. Identify what qualitative characteristics of information can be achieved through integrated reporting.                                                                                                                        

Answer 1

1.(A)Accounting theory:

It is total set of assumptions,meathods,policies and procedures in application of financial policies.Accounting practices are the regulatory framework of financial statements and financial reporting.

-It provides effective accounting and financial reporting.
-Principles of accounting aim to improve comparabulity and also consistency of accounting information.
-Accounting theory review the practices andd regulatory framework

Differentiation from a average accountant:

Accounting theory have to be more qualitative than quantitative.so,its effective to maintain good financial reporting norms.Each theory is bound by concept oriented framework of accounting.

Every accounting professionals will operate under four assumptions.
-Seperate Legal Entity
-Statements have to be prepared with concerned countries currency
-It have to be prepared monthly or yearly basis
-Organisation have to exist and not go bankrupt.

1(B) Philosophical foundations and main arguments of critical accounting research

-Philosophy of accounting practices encompass concepts,ideas and rules for the preparation and auditing of accounts that will help in financial statements of indivisuals or companies.
-Transparency have to be maintained by not submitting false financial documentation.
-Statements should be fair and accurate.
-Establish rules and principles to be used when it comes to financial information

2(A)features of positive and normative theories of accounting

Many organisations want to presesnt their financial statements and their performances in a straight forward system.there are two different types of theories which are called Positive accounting and Normative accounting

Positive accounting:
this is a practical approach of an accounting which is happening in business currently.this practical approach is used in data collection and book keeping.It looks at past data for preparations.
Example:
if company increase shaleholder dividends this year,then coropate growth causes a stockholder dividends.

Normative accounting:
This is a theoratical approach of an accounting.in this type of accounting everything have to be done according to the principles.normative accounting works with events in future.

Example:
Signing the contracts it can be paid in a lump sum at later date or over a period of months in installments.

2(b)Differentiate Positive Accounting Theory (PAT) from other positive theories of accounting

When an organisation chosses form of accounting over another policy.it is common in general use of both positive and normative accounting.

the nature of positive approach of accounting it creates the foundation to employ normative accountancy theory within their business.

Positive accountancy is a practical approach,it is based on what is currently happening in business.by comparing with other policies it evolves while ensuring economical theories.

Financial realities found by positive accounting practices by factual based theories.

2(C)Which theories have origin in the political economy theories

According to political economy theories Positive approach of an accounting are the origin.as this is practical approach in accounting policies.