Pragmatic Accounting Essay

3978 Words Jun 5th, 2013 16 Pages
There is no generally accepted theory of accounting. There are a number of accounting theories (though a systematic attempt has been made by Financial Accounting Board (FASB) of USA and IASC and other to formulate a comprehensive theory of accounting). The definition of Accounting Theory given by Hendriksen as “a set of broad principles that (i) provide a general frame of reference by which accounting practice can be evaluated, and (ii) guide the development of new practices and procedures” lead us to perceive accounting theory as a basis of explanation and prediction. The primary objective of accounting theory, as it follows from this definition, is to provide a coherent set of logically derived principles that serve as a frame of …show more content…
In the first place there is the value of the record itself. It is necessary to have ready access to facts, and reliable evidence of facts. For example, detailed and verifiable records of debtors' current accounts are essential. In the second place, there is value in the analysis of the results of past activity and past decisions, particularly if this can be related to standards and to individual responsibilities. Finally, there is value in data classified and accumulated for the purposes of projection. There is truth in the criticism that we are a long way from using the economic potential of electronic computers in the business sphere, and that the future will see an increasing use of computers in the scientific projection of past data to provide a constantly updated guide for managerial planning.

Administrative accounting is a response to managerial needs. It is economic only insofar as it provides, at the margin, value at least equal to cost. It follows that, in the rapidly changing scene which is typical of today, there is a need for a continual reassessment of needs, of responses, and of economics. It follows too that the administrative accountant is concerned not just with meeting general needs typical of the particular type of enterprise, but also the particular needs of those responsible for administering the

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