what is an accounting theory?
Having recently been introduced to accounting theory, and having tried to understand them What exactly is accounting theory? what is the use of them? why would one seek the theory?
Other - Business & Finance - 3 Answers
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Answer 1 :
"Accounting theory" is the logical rationale behind the practice. It explains WHY accountants do things the way they do.
Answer 2 :
Theory explains the underlying reasons for policies. Rent is an expense. But a security deposit is not. Theory explains why. I could explain that, but my name is not Theory.
Answer 3 :
Accounting must be used in accordance with specific rules and regulations, accounting theory is based on a set of basic economic truth that are of dual nature. The basic economic truth have characteristics similar to those of natural laws, in the sense that specific causes generate specific consequence.
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