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HI6025 Accounting Theory and Current Issue Assignment Help
Positive accounting theory puts forth an approach to actual accounting research. Unlike Normative accounting it provides a deeper perspective and knowledge about the subject, as there is much more research and analysis. PAT studies the prior and current examples of the methods adopted by people on all stages of business in various corners of the world. Subsequently, its main motive is to explain the actual scenario. It is an idea to explain and predict accounting in a more efficient and detailed way so as to provide a clear and detailed perspective. Positive accounting showcases the various methods one chooses to enhance a firm’s performance. Numerous observation and study ensures more detailed information that proves beneficial and better prediction of the behavioural pattern in future. This observation has been extended to the scientific theories of ontology and epistemology. This supports the causal construction of scientific theories based on cause and effect (Bonin, 2013).
Summary of the Article
Positive theories like Legitimacy Theory and Stakeholder Theory are few examples that explain the idea better. The theories help determine the relationship between the firm and environment keeping the resources in mind so as to ensure the growth and improvement of the business. The formation and implementation of contracts between various parties and the behavior of accountants are a vital part of the research of the mentioned topic that provides a deeper analysis. The positive accounting works with an aim of aligning the interest of the individuals working together, starting from the owner to the employees and also the partner linked with the firm. The contracts and methods used to perform the task are the most important criteria that bind the firm to its success and help it to survive in a jumpy and turbulent environment. The existence of this Positive accounting theory also ensures that the costing and expense control of the company be measured so that the agents don’t reap the profits out of the perseverance put in by the whole unit (Edwards, 2014). The agency costs are minimised by the efficient perspective provided b the researchers on how the various contracting methods can be put to work. Financial performance lies greatly on the frame work created by the positive accounting and research. In given circumstances management is to handle and resolve the issues with the best methods suiting to the company to its smooth running.
In accounting research much is unknown as one is not sure of which of the claims listed are to be considered solid. Hence, the according to analysis and research often accounting hypothesis have a weak and subtle chance to establish a claim as a fact. As stated above, the approach gradually touches the scientific attempt of understanding human behaviour and the possible causes. Positive and quantitative research is not the same. Qualitative and positive research takes the first step by collecting quality information in order to understand a phenomenon better before applying it in real sense. Understanding the approach and explaining the data regarding the assistance and development of a firm is the major and most vital job that gives the firm or company a structure and support. Positive research also tests theories and measures the most effective and suited considering the resources and relation of the firm to the environment (Alvarez and Barney, 2013, p.156). Positive Accounting Theory or PAT not only studies the prior and current information provided, but also the post results yet to appear are a part of the whole procedure. Predicting and considering the particular information in the former steps to run the company are then discussed and implemented according to the best suited nature of the firm. A successful positive research program includes creation of theoretical models with an aim to be designed tin order to be implemented and executed on a serious note. The constant implementation and failure ensures the serious use of the theory and its effective output in the field applied. In several circles the testing and implementation of the theory and its methods have distinct application and importance. The author in accounting is expected to prepare the model and collect the data hand in hand noting the progress and stability of the firm or company. Though the above has its utilisation in daily basis but the specialised people in preparing models are considered theorists in various circles of accounting. Positive accounting strategies and methods need a base of expertise to frame the models effectively so that the serious implementation can be ensured in particular fields. Straight and well framed model is the key factor in determining the effective launching and execution in the given situation. Methods have to suit the given criteria for the strong serious and positive execution of the model. Techniques used are to be matched and rematch in order to enhance the productive functioning of the firm. Getting an effective framework needs clear concepts, ideas and decision making ability. The mere creation of a model does not decide what the result will be but the management part plays a great role in the same. The decision-making ability of the management is very important as it is to be played considering the behavioural traits of the accountants which in turn will decide the stability of not only the currently implemented model and but also the firm. Putting forth a step or decision is not an easy task (Ashton, 2013, p.585). The interests and objectives of the employees should be aligned with the management and partners of the firm to assure the most fruitful outcome of the creation of models afore mentioned. Further analysis and study of the given topic will showcase a much detailed outlook on the subject provided (Hamlyn, 2013, p.3). Deep and extensive study of the theories and the implementation procedures will help shape the subject and provide a new angle and specialisation in perfecting the job. Positive Accounting Theory or PAT has a remarkable history both in the world of business and qualitative sciences. Understanding and analysing both the circles will play a significant role in the coming era, expanding the relation between the two now and tomorrow (Dyckman, 2013, p.700).
Positive Accounting theory or PAT attempts to explain and in due course forecast the actual practises pertaining to general accounting. Now, the speciality of PAT is that it is based empirically. Statistically credible predictions can result from the repeated and multiple observations. There is a rudimentary understanding in accounting theory that by making more and more observations around a point, a person will naturally be in a better position to forecast future trends. This is completely antagonistic to normative accounting where the observer tries to derive the future by concentrating on optimal standards of accounting. One of the best ways positive accounting can be explained is through the conservatism that it postulates in accounting. In this regard, PAT has origins in contract markets and is conditionally defined as having lower requirements of verifiability standards towards the recognition of losses and higher standards for gains (Wilkinson, 2013, p.920). This includes executive compensation contracts, lender contracts of debts etc. In this paper, the theory of positive accounting has been critically analysed to reach the elements of scientific research and the concepts of ontology and epistemology.
Ontology is a branch of metaphysics, or the study concerning the general nature of things, concerned specifically with the identification of, in very simple terms, the different kinds of things that exist. Some intrinsically ontological queries include the existence of God, nature of universe, existence of afterlife etc. because they address the elementary science of things.
On the contrary, Epistemology is more apprehensive of the nature of knowledge, the scope, possibilities and implications of it. Some of the essentially epistemological queries are the methods to separate the truth from the deception, and how to unearth such truths.
The Scientific research employs ontology to find what is true and epistemology then devises methods to figure out the truth. Positive accounting is thus taken qualitatively and later used to form causal justifications of the behaviour exhibited by humans in general activities of accounting.
Popper’s falsification of hypotheses demarcates the scientific from the unscientific by enforcing the criteria falsifiability. In this light, the falsifiable hypotheses are rejected as unscientific but this is considered a weaker method of testing fresh hypotheses and therefore, statistically accurate PAT theory is preferred. There are certain problems associated with the causal construction of incipient theoretical models. Therefore, there is a lot of dependence on this theory of falsification testing of hypotheses (Shvaiko and Euzenat, 2013, p.160).
Furthermore, the numerical values of existing parameters create a lot of chaos; replication is very low and not enough to rouse confidence in the observations.
The Significance and Limitations of the Article
The theory of positive accounting or PAT or the positive approach to accounting has been examined in this paper. This is a part of the greater theory of scientific research. This research raises some intellectual queries and integrates the following hypotheses:
Existence of a world independent of and above our imaginative faculties
The causes of such a world are parts thereof and are neither random nor the consequences of outside intervention
Careful observation produces passably valid information about the events surrounding us.
The knowledge, in particular related to causal explanation, is the rudimentary purpose of intellectual enquiry.
The paper addresses the intellectual program in terms of economics and accounting. This is definitively known as positive research method (Prasad and Jena, 2013, p.241). This positive accounting research is being increasingly applied in the theories of accounting. However, there are deficiencies in implementation which has led to this effect being much less efficient than expected. Eventually, these hypotheses are tested using the popper’s falsification criteria where the following line of action is followed:
Observation and development of primary ideas
Development of a formal theory which postulates certain predictions which are consistent with empirical parameters and is testable
By comparing the predictions of new and old theories, the former is tested. Rejection of theory occurs upon failure
This process is repeated indefinitely
The Accounting Theory and Current Issue Assignment Help has considered positive scientific research from the perspective of accounting theory and examined how the current ventures of the theory can be interlinked with scientific research methodology. However, the current program falls short of the requirements for operating scientific research. Current research in positive accounting is extensively quantitative and ad hoc in nature and therefore, the correlation is reduced to just the apprehended sign of the relationship. Rather, more specific and vulnerable theoretical models are required for detailed hypotheses testing. Also, better measurement techniques are required so that the theoretical models can be rigorously analysed. Correlation between the different interesting concepts developed can be established by comparing the proxies of one concept to the proxies of the other concept (Persson, 2015, p.4). Also, there is a premeditated proclivity towards the testing of hypotheses in this paper. That has been accepted as the singularly better means of arriving at the scientific research. However, the estimation of different parameters has been ignored. There is also a requirement for the information archives of the parameter measurements. This includes the ones that have been made during the testing of particular hypotheses in the progress of research as well as those been made to add to the data archive itself. Lastly, more replication is required to bolster the testing results of the hypotheses as well as to support the measurements. Replication is a direct indicator of the accuracy that has been achieved while measuring the experiments. Moreover, replication would also denote the ability to explore the limits of research finding applicability. The inherent requirement for critical research of scientific methods and ontology is the treatment of theoretical models as the different unproven claims about the world and existence. Testing of these hypotheses is required to establish up to where these theories are applicable, if at all they are (Nagshvar and Javidi, 2013, p.2703). So, to arrive at better results and make statistically superior predictions, it is imperative that there be many theories competing against each other over criteria of testing. In the meanwhile, the measurements should be made. Instead, this paper addresses a solution, considers it through falsification and describes it scientific duly following pseudoscientific pursuits.
Bonin, H., 2013. Generational accounting: theory and application. Springer Science & Business Media.
Edwards, J.R., 2014. Twentieth Century Accounting Thinkers (RLE Accounting).Routledge.
Alvarez, S.A. and Barney, J.B., 2013. Epistemology, opportunities, and entrepreneurship: Comments on Venkataraman et al.(2012) and Shane (2012). Academy of Management Review, 38(1), pp.154-157.
Ashton, J.C., 2013. Experimental power comes from powerful theories [mdash] the real problem in null hypothesis testing. Nature Reviews Neuroscience, 14(8), pp.585-585.
Dyckman, T.R. and Zeff, S.A., 2014.Some methodological deficiencies in empirical research articles in accounting. Accounting Horizons, 28(3), pp.695-712.
Hamlyn, D.W., 2013. epistemology. Cognitive Development and Epistemology, p.3.
Naghshvar, M. and Javidi, T., 2013.Active sequential hypothesis testing. The Annals of Statistics, 41(6), pp.2703-2738.
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