Difference between accounting and accounting theory;

Difference between accounting and accounting theory;

A financial event occurs

If asked: How should we account for this event? The answer is related to accounting practices

And accounting in this sense, that is: recording the event in the journal, transferring the registration to the general ledger, taking balances from the general ledger accounts, and reporting the balances in the financial statements.
But if it is asked: Why do we do this kind of accounting? The answer is related to the field of accounting theory

Godfrey et al., (2003) in the book Accounting Theory, have provided the following definitions for accounting theory:

1. Theory is a logical arrangement of propositions that have a decreasing generality.

A theory is a set of ideas that are used to explain observations made in the real world.

3. A coherent set of fundamental assumptions, basic concepts and practical principles, which provide a general frame of reference for a scientific field.

4⃣ Very simply, theory can be defined as the logical reasoning behind any expressed belief.

5. The simplest form of a theory is the expression of a belief expressed in a language

Also, Christensen and Demsky (2003) in the introduction of their book, accounting theory, say that the work of accounting theory is to help understand, explain, and improve the decision-making of actors in the field of accounting.

These role players include company managers, auditors, and standard setters.

Accounting theory is a guide for responsible, professional, and high-quality decision-making, as well as responsible, professional, and high-quality behavior in the field of accounting.

In theory, we seek to explain the method of ‘choosing’ accounting methods, not to do accounting.

Although the theory has a basis close to philosophy, especially the additional philosophy, but philosophy is more general. In philosophy, we talk about the history of a field, permitted research methods in that field, basic concepts in that field, and the like.

In this sense, Godfrey’s accounting theory book is a book of accounting philosophy, but Watts and Zimmerman’s proof accounting theory book is a theory book in its strict sense.
Mehdi Koh Soltani (financial services, accounting, financial and tax consultant):
Group of accountants, auditors, Tabriz
https://t.me/joinchat/BnzBsTuioTshiXBwf9bBPQ