Accounting Theory Explained: Concepts & Approaches
Accounting theory may seem abstract, but it’s essential to the logic of accounting practice. This article defines Accounting Theory, describes its components — assumptions, principles, models — and outlines how it governs decisions in recognition, measurement, and presentation. You’ll be introduced to influential approaches (positive, normative, descriptive) and see how theory influences standard setting globally. We also examine the benefits and limitations of theory in practice, and how evolving business environments present new theoretical challenges. A helpful read for students and professionals alike.