what are the advantages and disadvantages of accounting theory?

what are the advantages, disadvantages and problems of accounting theory

advantages and disadvantages of accounting theory formulation

Formulation of Accounting Theory known in the literature several approaches in menrumuskan accounting theory. Each author provides methods that follow. Several approaches in the formulation of accounting theory by Belkaoui are as follows:

Informal approach consists of:
a. Pragmatic, practical and non-theoretical
In this method the formulation of accounting theory and practice based on the situation on the ground. To be considered is what things are useful to solve practical problems.
b. Authoritarian approach
In this method of accounting is to formulate a theory of professional organizations issued statements governing the practice of accounting.

Theoretical approaches are divided into:
a. Deductive
The formulation starts from the formulation of the basic propositions of accounting (accounting postulates and principles) and then taken to its logical conclusion on accounting theory on this question. This approach is employed in the preparation of accounting structure which was formulated first purpose financial statements, formulate postulates, and principles, and ultimately more specifically compose engineering or accounting standards.
b. Inductive
Preparation of accounting theory is based on some specific observations and measurements of various samples and finally formulated a uniform or recurrent phenomena (accounting information) and general conclusions drawn (postulates and principles of accounting). The stage is passed:

· Collecting all observations
· Analyze the observation group
· Drawing general conclusions
· Testing the general conclusion

Conduct
In this akunansi formulation approach used the concept of fairness, justice, and truth possession. According D.R. Scottkriteria to be used in the formulation of accounting theory is fairness to the parties concerned are treated fairly.

Sociological
Of major concern in the formulation of accounting theory is social impact of accounting techniques. So the concern is not direct user, but also the whole society perpetually.

Macro Economics
Economic approach in the formulation of accounting theory emphasizes the control the behavior of macroeconomic indicators resulting formulation of accounting theory. Thus, the choice of accounting techniques are based on the impact on the national economy. It is concluded that free technique and accounting policies should be able to describe the economic reality and the choice of accounting techniques should depend on the economic consequences.
From the literature we know of other communicative approach in the formulation of accounting theory. This approach was developed by Bedfourd and Baldouni who consider accounting as a system which is integrated in the communication process. Here what information needs to be formulated and presented by the company to the readers so that they can use them in the decision making process.
Many other approaches that should be mentioned here include behavioral approach, which emphasizes on the behavioral aspects of information generated by accounting, pragmatic, nontheoritical approach, theory of accounts approach the look of the aspects of the relationship between accounting estimates constructed from the basic theory of double entry.