Chapter 2 Week 9

Synatic and semantic Theories Synatic theory: Slide10: Theories based on historical cost conventions lead to cautious hypotheses. The hypotheses therefore are unable to be tested and, as per the falsifications approach Accountants argue that there is no requirement that accounting outputs should have any semantic content. The role of accounting is to allocate the historical cost of resource usage against revenue to determine the surplus secured from economic activity.

Normative Theories: Assumptions: (rarely based on any empirical testing) Accounting should be a measurement system Profit and value can be measured precisely Financial accounting is useful for making economic decisions Markets are inefficient or can be fooled by creative accountants Conventional accounting is inefficient (in an information sense) There is one unique profit measure.

The deductive framework was to be rigorous and consistent in its analytic connections with the real world. Although financial statements are abstractions and reductions of firms economic affairs, since they summarise the stock and the movement of economic resources, they should be pragmatic only to extent that they were surrogates of direct experience. The pragmatic test were when observing financial statements, users should act as though they actually observed the events the financial statements represented. Although it methodology has both syntactic and semantic features, it relies mainly on syntactic relations and therefore has been labeled hypothetic-deductive

Ontological assumptions

Epistemological approaches

Methodology

Methods

Scientific research Naturalistic research Reality is objective and Reality is socially concrete constructed and a product of human Accounting is objective imagination reality Accounting is constructed reality Piecemeal Holistic advancement of Complexity of the knowledge world cannot be solved Reductionism by reductionism Testing of individual Irreducible laws hypotheses Laws capable of generalization Structured Unstructured Prior theoretical base No prior theory Empirical validation or extension Syntactic model Case studies formulation Exploration by Empirical induction to flexibility form hypotheses Experience of events Appropriate statistical methods