Cushing (1989) PDF

The Academy of Accounting Historians
A KUHNIAN INTERPRETATION OF THE HISTORICAL EVOLUTION OF ACCOUNTING

Author(s): Barry E. Cushing
Source: The Accounting Historians Journal, Vol. 16, No. 2 (December 1989), pp. 1-41
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TheAccounting HistoriansJournal
Vol. 16,No. 2
December1989
BarryE. Cashing
THE PENNSYLVANIASTATE UNIVERSITY
A KUHNIAN INTERPRETATION
OF THE HISTORICAL EVOLUTION
OF ACCOUNTING
Abstract:Distinctparallelsexistbetweenthehistoricalevolutionof
disciplines,as explainedin ThomasKuhn'sTheStructure
scientific
of ScientificRevolutions,and the historical evolution of the
accountingdiscipline.These parallels become apparentwhen ac-
counting'sdominantparadigm is interpretedto be the double-
entrybookkeepingmodel.Followingthisinterpretation, theexten-
sive articulationof the double-entrymodel over the past four
centuriesmaybe seen to closelyresemblethe"normalscience"of
Kuhn's theory.Furtherparallels become apparentwhen Kuhn's
conceptofthedisciplinary revolutions
crisesthatprecedescientific
is comparedto developmentsin theaccountingdisciplineoverthe
past 25 years.Thisportrayalofaccounting'sevolutionsuggestsan
uncertainfutureforthe accountingdiscipline.
The purpose of this paper is to examine the historical

evolutionof the accountingdisciplinefromthe perspectiveof
Thomas Kuhn's classic, The Structureof ScientificRevolutions
[1970a]. Kuhn's bookoffersprofoundinsightsintotheevolution
of scientificdisciplines,and thereforemay help us to better
understandpast and presenttrendsin theaccountingdiscipline.
This paper cites many aspects of the historicalevolution of
accountingwhich may be interpretedin ways that are consis-
tentwitha detailedexaminationofKuhn's theory.This exercise
in historicalinterpretationoffersa new and interesting
perspec-
tive on the historyof the accountingdiscipline, and is also
suggestiveofsome alternativeways in whichaccountingmight
evolve in the future.
The historicalevolutionof scientificdisciplineshas been
addressed by a numberof philosophersin addition to Kuhn,
includingLakatos [1970] and Feyerabend[1975]. This is not an
appropriateforumforaddressingthequestionofwhichofthese
I wish to express my appreciationfor helpfulcommentsby seminar
McMas-
ColumbiaUniversity,
participantsat Case WesternReserveUniversity,
terUniversity,Ohio State University, and theUniversity
PennState University,
of Utah.The specificcommentsof Haim Falk,GaryPrevits,Bob Sterling,and
Steve Zeffwereparticularlyhelpful.

2 HistoriansJournal,December1989
TheAccounting
worksis more credible.However,Kuhn's workwas chosen as

thebasis forthispaper because it is morewidelyknown,it has
had a substantial influenceon thinkingin numerous other
academic disciplines,1and it has spawned a small body of
literature(to be reviewed in the next section of the paper)
examiningits implicationsforaccounting.I leave it to othersto
draw out theimplicationsforaccounting(ifany) oftheworksof
Lakatos,Feyerabend,and otherhistoriansof science.
Accordingto Kuhn, the evolutionof a scientificdiscipline,
as practiced by membersof a scientificcommunity,may be
characterizedby the followingstages:
1. Pre-paradigmstage,duringwhicha bodyofphenomena
is examinedbyscientistsespousingcompetingschoolsof
thought,withno commonbody ofbelief,
2. Developmentofparadigmconsensus,or a commonbody
ofbeliefamong practicingscientistswithinthe field,
3. Normal science,in which the paradigmis furtherartic-
ulated to betterexplain thesubjectbodyofphenomena,
4. Crisisassociatedwithanomalies,or observablefactsthat
are unexplainablewithinthe existingparadigm,
5. The appearance of a new paradigm incommensurable
with the old, followedby debates betweenadvocates of
the rival paradigms,
6. Revolution,in which the consensusassociated with the
old paradigm is replaced by consensus on the new
paradigm,
7. Resumption of normal science based upon the new
paradigm,
8. Recylcingthroughstages 4 to 7.
A slightlymoreextensivesummaryofKuhn's thesisis presented
by Wells [1976,pp. 471-2].
This paper is organizedas follows.The firstsectionreviews
previous literaturewhich has applied Kuhn's theoryto ac-
counting.The next section addresses the question of whether
Kuhn's theoryof disciplinaryevolution in science may be
usefullyapplied to accounting.Given an affirmative answer to
this question, the thirdsection addresses two closely related
questions: (1) what is accounting'sparadigm? and (2) at what
stage in Kuhn's evolutionarycycle is accountingat this time?
Based upon the answers to these questions,the fourthsection
interprets recentdevelopmentsin accountingin termsofKuhn's
*Forexample, Guttingasserts that Kuhn's Structure"has had a wider

academicinfluencethananyothersinglebookofthelast twentyyears"[1980,p.
vl.

of theHistoricalEvolutionofAccounting 3
Cushing:A KuhnianInterpretation
theoryof the crises and responsesto crisis thatoccur in scien-

tificdisciplinespriorto theemergenceof a new paradigm.The
fifthsectionexaminespossiblefuturedirectionsforaccounting.
A final section brieflysummarizes the paper and its most
significantconclusions.
LITERATURE REVIEW
Referencesto Kuhn's work on the historyof science first
appeared in the accountingliteraturein 1966. Chambers[1966,
pp. 373-376] suggestedthat "the developmentof accounting
thoughtseems to have distinctparallels withthe development
of pre-Copernicanastronomy"and expanded this idea with
referenceto Kuhn's The CopernicanRevolution,published in
1957.The gistof Chamber'sargumentwas thatthe ideas in his
book, Accounting,Evaluation and Economic Behavior, could
have an impacton traditionalaccountingthoughtanalogous to
the impact of Copernicanideas on astronomy.However,this
analogywas not developedveryfar,and furthermore the scope
and power of the ideas presentedin The Structureof Scientific
Revolutionswere only dimlyapparentin The CopernicanRevo-
lution.2
The firsteditionof Kuhn's The Structure ofScientificRevo-
lutionswas publishedin 1962,and thisworkwas firstreferenced
in the accounting literatureby Sterling [1966, 1967, 1970a,
1970b]. Sterling'sworks during this period frequentlymake
briefreferencesto Kuhn's ideas in order to supporta line of
argumentsuch as "a new theoryusually arises as a resultof
'anomalies' in theold theory"[1970a,p. 444]. However,Sterling
did not attemptto morefullydraw out the analogy thathe so
oftensuggestedbetweendevelopmentsin accountingtheoryand
Kuhn's ideas.3
The firstrelativelycomprehensiveattempt to interpret
developmentsin the accountingdisciplinein termsof Kuhn's
theorywas providedbyWells[1976].He suggeststhatparadigm
consensusin accountingevolvedduringtheperiodfrom1900to
1940,and coalesced withthepublicationoftheclassic worksof
2ForKuhn's personalaccountof the developmentof his ideas, see his The

Essential Tension: SelectedStudies in ScientificTraditionand Change (The
University ofChicagoPress,1977),especiallyits preface.
3Animportant qualificationto thisstatementis thatSterlings participation
on theAmericanAccounting AssociationCommitteethatpreparedStatement on
Accounting Theoryand TheoryAcceptance[1977] almostcertainlyaccountsfor
theemphasisgiventhereto Kuhn'stheoryas a way ofinterpreting theexisting
stateofaccountingtheory.

TheAccounting
Gilman [19391,Sanders,Hatfieldand Moore [1938],and Paton

and Littleton[19401. The central featureof this accounting
paradigm in Wells' analysis is the historical cost basis of
accountingvaluation. The period from1940 to approximately
1960 is treatedby Wells as a periodofnormalscience.A period
of crisisthenarose whichhe attributesto:
one class of anomaly thathas provento be intracta-
ble. The historical-costbased system fails to take
accountofchangesin asset pricesand changesin the
purchasingpower ofthe monetaryunit [p. 4761.
The accountingdiscipline's response to this crisis included a
periodofprofessionalinsecurityaccompaniedbyad hoc modifi-
cation of accountingrules,attemptsto definethe fundamental
assumptions(postulates)and objectivesof the discipline,and
the emergenceof alternativeparadigms. Wells identifiesfour
schools of thoughtassociated with what mightgenerallybe
referredto as accountingfor changingprices, and concludes
that "accounting is emergingfroma state of crisis" [p. 480]
whichcould be expectedto lead to a shiftofallegiancesin favor
of one of the competingschools of thoughtculminatingin the
emergenceof a new paradigm.
A major themeof Wells' analysis is his defenseofa priori
research in accountingfromthe increasingcriticismit was
receiving,for example, fromNelson [1973] and Gonedes and
Dopuch [1974]. Kuhn's theorypredictsthat a paradigm shift
will be accompanied by attemptsby advocates of competing
paradigms to persuade their opponents to their view. Such
attemptsare usuallyunsuccessfuldue to the incommensurabil-
ityof competingparadigms- thatis, each paradigmassumes
standardsofevaluation(ofparadigms)thatare not compatible
withthestandardsofthecompetingparadigm.Thus,paradigm
debates oftenappear to have abandoned thestandardsofscien-
tific evaluation in favor of emotional appeals. As a result,
paradigmdebates invitecriticismsuch as thatcitedby Gonedes
and Dopuch [p. 50]: "it has seemedpossible,usingthis[a priori]
approach, to declare the superiorityof just about any set of
accountingprocedures,dependingupon the particulara priori
model adopted." In contrast,Wells defendsa prioriresearchin
accountingby viewing it as an essential step in a Kuhnian
paradigmshiftwhich,accordingto his analysis,was in progress
in accountingduringthe 1960s and 1970s.
Flamholtz [1976] develops the implications of Kuhn's
theoryin a way thathas someparallelsto Wells.She equates the

Cashing:A KuhnianInterpretation
period priorto 1930 to Kuhn's pre-paradigmstage, ?.ndiden-

tifiesthe 1930s as the period during which an accepted ac-
countingparadigmwas developed. However,her analysis,un-
like that of Wells,has a heavy institutionalflavor,in that she
definesaccounting'sparadigmin termsof thepronouncements
issued by the accountingprofessionand the SEC. Thus,normal
scienceconsistedofthecontinuingdevelopmentand promulga-
tion of accountingrules followingthe 1930s by the Committee
on AccountingProcedure,theAccountingPrinciplesBoard, and
the Financial AccountingStandards Board. Accordingto her
analysis,the existenceof a crisis was apparentby 1970 in that
the accepted accountingparadigm failed to reflecteconomic
realityin a varietyof ways, includinga failureto deal ade-
quately withprice-levelchanges,withthe increasingcomplex-
ityof economictransactions,and withthe need to account for
humanresources.She suggeststhata new paradigmwhichwill
address these issues is likely to emerge througha combined
effortofgovernment and theaccountingprofession, but does not
describethe possible natureof such a paradigm.
The AmericanAccountingAssociation'sStatementon Ac-
countingTheoryand TheoryAcceptance(SATTA) was published
in 1977,but representedthe culminationof a projectbegun in
1973and intendedto yield"a statementthatwould provide. . .
[a] surveyand distillationof currentthinkingon accounting
theory"[1977,p. ix].Instead,SATTAidentifiedthreealternative
theoryapproaches and attributedthe extantlack of consensus
regardingthe "correct" approach as attributableto the exis-
tence of a Kuhnian paradigm debate. The three alternative
theoryapproachesidentifiedby SATTAwere labelled (1) classi-
cal approaches to theory development, (2) the decision-
usefulnessapproach,and (3) information economics.
SATTAdoes not attemptan historicalinterpretation of the
of
evolution accounting thought in terms of Kuhn's stages.
Rather, in Chapter 4, it focuses on an interpretationof the
existinglack oftheoryconsensusin termsofone specificstageof
Kuhn'stheory- thestageofparadigmdebate.Onlybrieflydoes
the documentimplythata paradigmconsensuseverexistedin
the accounting discipline: "the apparent consensus on the
'matchingand attaching'approach to theoryformationis disin-
tegrating"[p. 41]. SATTAdoes notdescribethenatureofnormal
sciencecarriedout underthisparadigm,or explain thekindsof
anomalies that may have led to the crisis of disintegrating
consensus.Thus it is a static applicationof a specificKuhnian
concept,ratherthan a dynamic application of Kuhn's entire

TheAccounting
theory.Of course the purpose of SATTA was to summarize

currentthinkingon accountingtheory.In that light,SATTA's
failureto offeran accountofthe evolutionofaccountingtheory
is betterunderstood.
SATTAwas reviewedby Hakansson[1978] and by Peasnell
[1978]. Hakansson expresses disagreement with SATTA's
suggestionthatits three"alternativetheoryapproaches" might
be treatedas competingparadigms,and suggestsinstead that
accounting'sparadigm
would seem to me to have to be closelyrelatedwith
thestructureofmoderncorporateaccounting:a focus
on assets, on claims to these assets, and on periodic
changesin both,witheach dimensionassociatedwith
a uniquestandardizednumber[p. 722].
In his view,the disenchantment of the 1960s should be attrib-
uted to "the shortcomingsof relyingon the single-number
(nominal currencypoint) estimatesto which the double-entry
systemnaturallyleads us" [p. 722] ratherthanto dissatisfaction
with the prevailingmatching-attaching paradigm. Hakansson
interprets SATTA's three alternative theoryapproaches as at-
tempts to resolve the anomalies of the existing accounting
paradigm, which he asserts "has not come close to being
overthrownand may yetbe repaired" [p. 722]. As Hakansson's
objective is to critique SATTA,his Kuhnian interpretation of
accounting's evolution goes no further than this. Despite its
brevity,his interpretation is noteworthyin that it providesa
quite different perspectivethan does SATTA,Wells, or Flam-
holtz.
PeasnellcritiquesSATTAfromtwo pointsofview. First,he
suggests that Kuhn's theoryis not applicable to accounting
because it "is intendedto apply only to the sciences" [1978, p.
219] and "Accountingis nota science,it is a serviceactivity"[p.
220]. Second, he argues that SATTA's identificationof the
classical and decision-usefulnessapproaches as competing
paradigms cannot possibly be correctbecause, under Kuhn's
theory,"there is little likelihood of an individual scientist
acceptingmore than one conflicting(as contrastedwith com-
plementary)paradigm" [p. 221]. To supportthisview he argues
thata numberofprominentaccountingscholarscould easily be
associated witheither"paradigm" [pp. 222-223].
Previts[1980]4applied Kuhn's conceptsto his analysis of
4This is the publishedversionof Previts'1972 Ph.D. dissertationat the

Universityof Florida.

Ciishing:A KuhnianInterpretation
the evolutionin accountingthoughtfroma pure historicalcost

paradigmto a modifiedcost paradigmearlyin the20thcentury.
Accordingto Previts,the pure historicalcost paradigm"rested
almost exclusivelyupon the concept of historical cost qua
exchangeprice,as foundin thedoctrinesofprominentClassical
economists"[p. 192]. This paradigmwas challengedand even-
tually transformed"into a modifiedcost paradigm charac-
terizedby importantformulationsof theoriesfordepreciation,
amortizationand appreciation"[p. 192].
Laughlin[1981]presentsa critiqueofthe Kuhniananalyses
of both Wells and SATTA in an attemptto show that Kuhn's
theory"just does notfitthepresentaccountingphenomena"[p.
330]. LikePeasnell,he questionswhetheraccountingis a science
suitableforanalysisusingKuhn's theory.His answerconsistsof
an assertionthat
it seems to be somewhatfancifulto suggestthat the
practiceof accountingsince the 1940's could, in any
way, be classified as normal science. Or that the
double-entryequality,the realization and matching
principleetc.can be consideredto be thecontentsofa
paradigm/disciplinary matrixof accountingscience
[p. 335].
Accordingto Laughlin's interpretationof Kuhn, "the main
hallmarkof normalscience is the makingof'good predictions'
"
from the 'practice of the field' [p. 335]. He reviews the
literaturedealing with the predictionof corporatefailure,as
marketsliterature,and arguesthatthesefail
well as theefficient
to qualifyas normalscience. He thensuggeststhat the natural
sciencesmay be a poor model foraccountingscholarsto follow
in attemptingto maketheaccountingdisciplinemorescientific.
The anarchistictheoryof knowledgeproposed by Feyerabend
[1975] is a bettermodel forthe evolutionof the social sciences,
Laughlin asserts,than is Kuhn's theory.The remainderof his
paper pursuesthe implicationsof thisview.
Glautier[1983]uses Kuhn's conceptsofparadigmand crisis
to presenta broad theoryof how the nature of accountingat
various stages of historyhas been determinedby the degreeof
concentrationor dilutionof political power. He examinesfour
periods of history,(1) the world of antiquity predating the
inventionof money,(2) the Roman world,(3) the Middle Ages,
and (4) the ModernAge. He hypothesizesthat strongformsof
centralizedpowerare associated withaccountingsystemshav-
ing a paramountconcernwith control,while the dilution of
centralizedpoliticalpowertendsto be associated withmultiple

TheAccounting
accounting systems designedtoachievedifferent objectives. His

analysissupports these hypotheses. Glautier's work is note-
worthyin the followingrespects,(l)he examinesa much
broaderperiodofhistory thananyotherauthorcitedhere,(2) he
suggests that accountinghas gone throughseveralstagesof
paradigm consensus and revolution, and (3) he impliesthat
double-entry bookkeeping is the central feature ofaccounting's
extantparadigm. One limitation ofhisanalysis, however, is that
he does not attempt to describe the evolution of accounting in
terms of the specific benchmarks of Kuhn's theory;indeed, he
makesonlyone tangential reference to Kuhn'swork.
Butterworth and Falk [1986] suggestthat much of the
accounting literature ofthepast 60 yearsreflects a controversy
betweena "valuationparadigm"and a "stewardshippara-
digm."The valuationparadigm,associatedwiththeworksof
Canning[1929],Chambers[1966] and Sterling[1970b],"as-
sumesthattheprimary roleofaccounting is toprovideinvestors
and otherinterested parties with an estimate ofthecollective
value of the rightsto futureservicesowned by a specific
accountingentity"[p. 12]. In contrast,the stewardship
paradigm,associatedwithsuchauthorsas Paton[1922],San-
ders,Hatfieldand Moore[1938],Mattessich[1964],and Ijiri
[1967],viewstheaccountant"as a processorofmarketvalues
whois notconcerned withtheirprediction" [p. 13].Butterworth
and Falk suggestthat the recentcapital marketsresearch
literatureinaccounting has itsrootsinthevaluationparadigm,
whereastherecentagencyresearchliterature inaccounting has
parallels with the stewardship paradigm. The implicationis
thataccounting is presently in a stageofparadigmdebate.To
reconciletheconflict betweenthesetwoparadigms, theypro-
a
pose "contracting paradigm,"whichassumes"thata princi-
pal objectiveof accountingreportsis to providean efficient
basisforfinancial contracts betweenmanagement ofa business
enterprise and the firm's owners and creditors" [p. 22]. Their
is
analysis noteworthy in that its primary focus is on the
evolution ofaccounting researchparadigms.
In summary,the literatureprovidesa varietyof views
concerning how the evolutionof accountingcorresponds to
Kuhn'sideasabouttheevolution ofscientific disciplines. There
is noagreement onthenatureofaccounting's current paradigm,
on the natureof "normalscience"in accounting, or on the
possiblefeatures of a future paradigm. It is interesting thatmost
of theauthorscitedsuggestthataccounting is presently in a
stateofparadigmdebateor crisis.

oftheHistoricalEvolutionofAccounting 9
This paper attemptsto augmentthe existingliteratureby

drawingupon a much more detailed analysis of Kuhn's ideas.
Whileotherauthorsprovideonlya limitednumberofreferences
to his work,this paper uses over 30 specificquotations from
Kuhn [1957, 1970a, 1970b] to build an interpretiveframework
within which the historical evolution of accounting may be
criticallyexamined. This approach provides more persuasive
evidenceof the correspondencebetweenthe evolutionof scien-
tificdisciplinesand the evolutionofaccounting.It also offersa
unique perspectiveon the past, present,and possible futureof
accounting.
DOES KUHN'S THEORY APPLY TO ACCOUNTING?

Is it appropriateto apply Kuhn's theoryofthe evolutionof
scientificdisciplines to accounting? Specifically,if Kuhn's
theoryis based upon the historicalevolutionofscientificdisci-
plines, can it say anythingpertinentabout other disciplines
supposedlynot withinits purview,such as accounting?
It is firstnecessaryto definewhat is meantby "accounting"
as the term is used in this paper. Because revolutionsin a
Kuhniansenseoftenresultin fundamentalshiftsin thenatureof
a discipline,it is necessaryto use a verybroad definitionthat
will not inhibitthinkingabout the possible futureevolutionof
accounting.Withthisin mind,accountingis consideredhere to
deal with making sense out of the economic performanceof
individualsor groupswho are responsibleforthe utilizationof
economic resources,for the purpose of exertingcontrolover
those utilizationactivities.When referencesare made to "the
accountingdiscipline,"as it was constitutedduringa particular
era, thisrefersto thebodyofknowledgeabout accountingheld
in common by leading accounting thinkersof that erfc.At
various timesin the past, these accountingthinkersmay have
been merchants,textbook writers, practicing accountants,
teachers,scholars,or a mixtureof these.
If this definitionof accountingis accepted,then Peasnell's
contentionthataccountingis nota sciencebecause it is a service
activitymust be rejected.Making sense out of realityis very
much a scientificactivity,and is also oftenperformedforthe
purposeofcontrollingcertainfeaturesofreality.An example is
the fieldof medicine,whichis a serviceactivitythat is solidly
based in scientificresearch.Therefore,given the definitionof
accountingused here,theresemblancebetweenaccountingand
otherscientificdisciplinesmaybe sufficient to permittheuse of

10 TheAccounting
HistoriansJournal,December1989
Kuhn'stheory to learnsomething usefulabouttheevolution of

accounting.
However,Kuhn appears to believe that his theoryhas
meaningonly fora special categoryof disciplineshe calls
sciences:"Mymethodological is,however, directed
to the sciences. . . "prescription he
exclusively [1970b,p. 243].Furthermore,
clearly intends to exclude social sciences, such as accounting,
fromhisthesis,
I claimno therapyto assistthetransformation ofa
proto-science to a science,nor do I suppose that
anything ofthatsortis to be had. If... somesocial
scientists takefrommetheviewthattheycanimprove
thestatusoftheirfieldbyfirstlegislating agreement
on fundamentals and thenturning to puzzlesolving,
theyarebadlymisconstruing mypoint[1970b,p. 245].
But theobjectiveof thispaperis notinconsistent withthese
views.Thispaperseeksneither a "methodological prescription"
noran "improvement instatus"foraccounting. Theobjectiveof
this paper is to enhanceour understanding of accounting's
evolution, and Kuhn's ideas may contribute to thisobjective.
Kuhnalso assertsthat,
thoughscientific development mayresemblethatin
otherfieldsmorecloselythanhas oftenbeen sup-
posed, it is also strikingly different . . . One of the
of
objects [this] book was to examine such differences
and beginaccounting forthem[1970a,p. 209].
Thus even Kuhn would acknowledgethat the evolutionof
accounting mayresemble thatofthesciencesinsomeways.But
therestofthispassageispuzzling, becauseKuhn'sbookdoesnot
systematically examinethehistorical evolution of"otherfields"
(e.g.,non-sciences). Furthermore, itdoesdevotea chapter(Chap-
terII) tothetransition offieldstosciences,a subjectthatwould
seemingly be veryrelevantto many"otherfields."Thus,Kuhn
apparently offers no supportforhis positionthathis theories
cannotbe usefully appliedtoforms ofintellectual inquiry other
thanthosehe calls sciences.
Inassessing, Kuhn'swork, philosopher LarryLaudanasserts
that,
thereis no fundamental differences in kindbetween
scientificand otherformsofintellectual inquiry.All
seektomakesenseoftheworldandofourexperience.
Alltheories, andotherwise,
scientific aresubjectalike
toempirical andconceptual constraints . . . Thequest
fora specificallyscientific formofknowledge, orfora

dishing: A KuhnianInterpretation
demarcation criterion between science and non-

science,has been an unqualifiedfailure[1981,p. 153].
Following this line of thought,it is concluded here that ac-
countingas an intellectualdiscipline may resemble Kuhn's
"sciences" in importantways.As pointedout above, even Kuhn
would acknowledgethis. Therefore,Kuhn's theories may be
pertinentto an understandingof the historicalevolutionof the
accountingdiscipline.
Evidence that Kuhn's theoriesmay be usefullyapplied to
intellectualdisciplinesotherthanthe"sciences" abounds in the
recentliteratureof such disciplines.PhilosopherGary Gutting
has assembled an enlighteninganthologyof articles froma
varietyof disciplines,each of which examines the discipline's
historyfromthe perspectiveof Kuhn's Structure.In addition,
Gutting'sbibliographylists 119 "WorksAboutThomas Kuhn"
in the fieldsof sociology,political science,economics,psychol-
ogy, history,theology,art and literature,and education. If
Kuhn's ideas have been enlightening to scholarsin such diverse
as
disciplines these, thensurelytheymusthave some relevance
to the accountingdiscipline.
Kuhn's Structurehelps put the accounting discipline in
perspectiveby creatingan awareness that it may have impor-
tant similaritieswith other intellectualdisciplines.For exam-
ple, progressin the accountingdiscipline may be noncumula-
tive;accountingthinkersmaybe influencedin theirviewsofthe
natureofaccountingbydominantideas thattheyare onlydimly
aware of; and there may be times in the developmentof the
accounting discipline when it is necessary to identifythese
dominantideas, question them,and perhaps discard them in
orderto assure thatthedisciplinewill achievefurther progress.
WHATIS ACCOUNTING'S PARADIGM?

A seriousobstacle to thosewho seek to use Kuhn's thesisto
identifythe paradigmofa particulardisciplineis thathe never
definesexactlywhat a paradigm is. In a paper discussingthe
firstedition of Structure,Margaret Masterman identifies23
differentways in which Kuhn uses the term[1970, pp. 61-65].
Kuhn's response[1970b],whichwas partiallyincorporatedinto
the postscriptof the second edition of Structure[1970a], is
helpfuland is probablya good place to start.
In his postscriptKuhn says that "a paradigm is what the
membersofa scientificcommunityshare" [1970a,p. 176],and a
"scientificcommunityconsists... of the practitionersof a sci-

12 TheAccounting
entificspecialty" [p. 177].Thusthewaytoidentify a paradigmis

to identify thepractitioners ofa particularspecialtyand then
scrutinize theirbehavior.However, "communities in thissense
exist/of course, at numerous levels" [p. 177];thus at one level
areall naturalscientists, at a slightly lowerlevelarephysicists,
chemists, andothermajorgroupings, at thenextlowerlevelare
subspecialties such as organicchemistryand high-energy
physics, within these subspecialties aresmallergroupsworking
on relativelyspecificproblems."Paradigmsare something
sharedby the membersof such groups"[p. 178].But if the
groupsexistat different levels,thenparadigmsalso existat
different levels.
Withrespectto accounting, it wouldbe a simplematterto
develop taxonomy specialtiesand subspecialties
a of analogous
to Kuhn's.However,thisis notnecessary, becausethepurpose
hereis toidentify an accounting paradigmthatencompasses the
entirediscipline,and that deals withthe subjectmatterof
accountingat its mostelementary level.If such a paradigm
exists,it must be one that, paraphraseKuhn,all members
to of
theaccounting community share. Note that thisassumes that
accountingdoes have a paradigmthatis agreedupon by all
membersof thiscommunity, and is not in thepre-paradigm
stage which Kuhn believes is characteristic of manysocial
sciences.If thisassumptionis incorrect, thenreadersshould
have no difficulty in falsifying it by identifying subgroups
withinthecommunity of accountants who do notacceptthe
paradigm.The accountingparadigmthat is identified here
passes this test.
In identifying the paradigmsharedby a scientific com-
Kuhn cautions againstequatingparadigm with
"munity,
Scientiststhemselves wouldsay theysharea theoryor setof
theory:
theories. . . however,'theory'connotesa structure far more
limitedinnatureand scopethantheonerequiredhere"[1970a,
p. 182].He also statesthatthemembers ofa scientificcommu-
nitymay at times diverge into separate "schools" that "ap-
proach the same subject from incompatible viewpoints" [p.
177],suggesting thatthe viewsheld by such schoolsare not
paradigms.Thesecomments suggestthat,in isolatinga disci-
pline'sparadigm, it is necessary toexaminethesubjectmatter
ofthediscipline; thatis,thebodyofphenomena ofconcerntoits
practitioners.
Againstthisbackdrop, it appearsthatnoneoftheprevious
literature thatattemptsto applyKuhn'stheoryto accounting
has succeededin capturingthe essenceof his conceptof a

oftheHistoricalEvolutionofAccounting 13
paradigm.Specifically,the competingparadigmsidentifiedby
Wells,SATTA,Previts,and Butterworth and Falk all represent
theoriesor schools of thoughtthat approach the same subject
matterfromincompatibleviewpoints.Thus, none of these are
paradigmsin a Kuhniansense. Flamholtzequates accounting's
paradigmwiththeaccountingrulespromulgatedby accounting
regulatorybodies,but it is hard to imaginethatconsensusever
existedwithrespectto these.Glautier'sassociationofthenature
of accounting with the degree of centralizationof political
controlin societyperhapscomesclosestto Kuhn's meaning,but
Glautier never fully enumerates the specific featuresof an
accountingparagidm.
Kuhn's attemptsat clarificationfinallylead him to substi-
tutethe termdisciplinary matrixforparadigm.The disciplinary
matrixofa field,accordingto Kuhn [1970a,pp. 182-7],has four
components,(1) symbolic generalizations,which are expres-
sions,deployedwithoutquestionbygroupmembers,in a logical
formsuch as an equation, (2) shared commitmentsto certain
fundamentalbeliefsabout the subject matterof the discipline,
(3) shared values for judging theories,predictions,etc., and
(4) exemplars,or sharedexamplesofproblem-solutions encoun-
teredby studentsof the disciplineas a means of learning-by-
example how theirdisciplineis practiced.
Accounting'sparadigm is identifiedhere by followingthe
guidelinessuggestedby thisdiscussion.First,thecommunityof
interestis definedas consistingof all accountants.Second, in
orderto avoid equating schools or theoriesof accountingwith
accounting'sparadigm,the subject matterof the accounting
discipline is broadly definedas that body of phenomena as-
sociated with the economic performanceof individuals or
groups responsiblefor the utilizationof economic resources.
Third, Kuhn's more precise definitionof a paradigm as a
disciplinarymatrixconsistingoffourmajorcomponentsis used.
Followingtheseguidelines,accounting'sparadigmis iden-
tifiedas a set ofsymbolicgeneralizations,sharedcommitments,
sharedvalues, and exemplarsassociated withthe double-entry
bookkeepingmodel. As definedhere, double entryrefersto a
bookkeepingsystemin which(1) data concerningpropertyand
equityare recordedaccordingto the rules of debit and credit
[Paton, 1917], (2) an equilibriumof debits and creditsis con-
stantly maintained, (3) a capital account is used to record
owner's equity,and (4) nominal accounts (revenues,expenses,
etc.) are used to recordchangesin capital, whetheror notthere
is a periodiccalculationof income [Winjum,1971].

TheAccounting
The double-entry bookkeepingmodel is richwithsymbolic

generalizations.Perhapsthe mostbasic, datingback at least to
Pacioli [1494],is:
Debits = Credits
As accountingevolved,othersymbolicgeneralizationsbecame
pervasive,such as:
Assets= Liabilities+ Net Worth
whichis oftenfirstattributedto Sprague [1908],and:
Net Income = Revenues- Expenses
whichis morecontemporary. Ata less generallevel,a varietyof
additional symbolicaccountinggeneralizationsexist and are
readilyformalizableas equations. All accountantsunderstand
them and can easily develop them and apply them to the
solutionof accountingproblems.
The exemplars of accountingconsist of the standard ac-
countingproblemsthatall studentsencounterin the introduc-
toryaccountingcourse.As we all knowthesetakeon a varietyof
forms.Theirprimaryobjectiveis to familiarizethestudentwith
the terminologyof accounting, with the interrelationships
among accounting variables within the frameworkof the
double-entry model,and with the manipulationsof thosevari-
ables thatare necessaryto thesolutionofaccountingproblems.
The shared values of accountingare easily identified,for
they are a common subject of accounting literature.They
includesuchfamiliarconceptsas "revelance"and "objectivity".
Accountingstudentsare usually formallyintroducedto such
values earlyin theirintermediateaccountingcourseby a chap-
terin theirtextdiscussing'accountingprinciples'or 'accounting
theory'.An excellenttaxonomyof accounting'sshared values
appears in Snavely [1967].
Accounting'ssharedcommitments representthefundamen-
tal assumptions underlying the double-entrybookkeeping
model. As these assumptionsbecame generallyaccepted hun-
dreds of years ago, it is not necessarilyeasy to identifythem.
Some are readilyfoundin the literature,forexample "account-
ingdata are based on pricesgeneratedbypast,presentor future
exchangeswhichhave actually takenplace or are expectedto"
[Moonitz,1961,p. 53]. Othersare generallyunstated.For exam-
ple, it is implicitin double entrythatthe accountingprocessis
inherently proneto error,and therefore thatthe redundancyof
debitsand creditsis necessaryin orderto provideopportunities
for checkingand recheckingthe accountingdata at various
stages in the accountingprocess. It is also implicitin double
entrythat the primarypurpose of a commercialventureis to

enhancethewealthofitsowners,and therefore thattheprimary

social roleofaccountingis to providetheownerswithmeasures
of wealthand changesin wealth.
These three fundamentalassumptions - that exchange
transactionsrepresentaccounting'sprimarydata source,that
internalcheck is critical to the accountingprocess, and that
accountingexistsprimarilyto serve owners' interests- seem
entirelyappropriateforthe age in which double-entrybook-
keepingdeveloped.But are theyappropriatefortheage we now
inhabit? And if not, then should the appropriatenessof the
double-entryaccounting paradigm itself be reevaluated? A
majorpurposeofthispaper is simplyto raise thisquestion.But
firstthecorrespondencebetweenthe historicalevolutionofthe
double-entry accountingparadigmand Kuhn's generaltheoryof
disciplinary evolutionis examined.
Most accountinghistoriansaccept the view that double-
entrybookkeepingwas developed in Italy during the 14th
century[de Roover, 1955; Lee, 1973; Nobes, 1982]. It is more
difficultto establishwhena consensusemergedthatthedouble-
entrysystemrepresentedthe cornerstoneof accounting.Ac-
cordingto de Roover,by the date of publication of Pacioli's
Summa [1494], double entrywas well developed and widely
used in the Italian city-states.Accordingto Chatfield,
In the first100 yearsafterits appearance theSumma
was translated into five languages, and books by
Italian, English, Dutch, and German authors pre-
sented descriptions of double entry bookkeeping
based on [it], spreading knowledgeof the "Italian
Method"throughoutEurope [1974,p. 49].
Thus the 16th centurycould be taken as the time when a
consensuson the double-entryaccountingparadigm began to
emerge.The best evidencethatparadigmconsensuswas firmly
establishedconsistsof the failureof the new systemof book-
keeping proposed as a direct challenge to double entryby
Edward Thomas Jonesin 1796. Accordingto Brown [1905, p.
168],"The completefailureofJones''EnglishBook-keeping'has
establisheddouble-entry once and forall as the onlymethodof
recordingcommercial transactionswith completeness."5By
1911,Hatfieldwould state that,
Accountingin all the modernworld has developed
fromthe same simplebeginnings.Pacioli's Tractatus,
5Formoreon thefailureofchallengesto doubleentrybookkeeping
byJones
and others,see Yamey [1980].

TheAccounting
eitherin theoriginalor in translationsor adaptations,

spread throughall Europe, and is the basis upon
whichmodernaccountingrests[p. 170].
Kuhn's theorysays thatparadigmconsensusis followedby
a periodof"normal science" thatcontinuesuntilthe discipline
entersa "crisis".It is suggestedherethat,afterthe 16thcentury,
leading accountingthinkerswere engaged in activitiesanalog-
ous to the "normal science" of Kuhn. The year 1960 will be
taken as the approximate point of transitionfrom normal
scienceto crisis,but morewill be said about accounting'scrisis
in the nextsectionof the paper.
If the double-entrymodel is to be taken as accounting's
paradigm,and if it is to be acknowledgedthat paradigm con-
sensusin accountingwas achievedapproximatelyfourcenturies
ago, thenit is necessaryto establishthatthehistoricalevolution
of accountingduringthe past fourcenturiesresemblesKuhn's
concept of normal science. To accomplish this,superficialin-
terpretations of what Kuhn meant by normalscience, such as
that embodied in Laughlin's assertion that it is fancifulto
suggestthat accountingcould have been engaged in anything
resemblingnormal science, must be avoided. Certainlyac-
countantswere not engaged in anythingremotelyresembling
the practice of physicsor chemistry,but leading accounting
thinkerswere engaged in activities very closely resembling
Kuhn's conceptof normal science. This becomes clearer upon
examinationofwhat Kuhn meantby the term.
Accordingto Kuhn,
Normal science consists in ... extendingthe knowl-
edge of those facts that the paradigm displays as
particularlyrevealing,by increasingtheextentofthe
matchbetweenthosefactsand theparadigm'spredic-
tions, and by furtherarticulationof the paradigm
itself[1970a, p. 24].
In chapter IV, Kuhn equates normal science with "puzzle-
solving,"forexample:
Bringinga normalresearchproblemto a conclusion
is achieving the anticipated in a new way, and it
requires the solutionof all sorts of complex instru-
mental,conceptual,and mathematicalpuzzles. The
man who succeeds proves himselfan expertpuzzle-
solver,and thechallengeofthepuzzle is an important
part ofwhat usually driveshim on [p. 36].
A briefreview of the historyof accountingfollowingthe de-
velopment of double-entry bookkeeping reveals that the

double-entrymodel has evolved in ways that closely resemble

thesedescriptionsofnormalscienceby Kuhn.These includethe
following:
1. Developmentof special journals forrecordingdifferent
typesof transactions,around the 16thcentury[Yamey,
1962,pp. 26-27].
2. Evolutionof the practiceof periodicincomedetermina-
tion and financial statementpreparation,during the
16thand 17thcenturies[Littleton,1933,pp. 123-140].
3. Extensionoftheapplicationofdouble-entry to organiza-
tions otherthan mercantilefirms,such as monasteries
and states,between 1559 and 1795 [Peragallo, 1938, p.
54].
4. Developmentofseparateaccountsto keep trackofdiffer-
ent types of merchandiseinventory,around the 17th
century[Yamey,1962,pp. 28-29].
5. Application to corporationswith many shareholders,
beginningwith the East India Company in the 17th
century[Irish,1947; Littleton,1933,ChapterXIII; Win-
jum, 1972,ChapterX; Chatfield,1974,Chapters7-8].
6. Emergenceof alternativemethodsof valuation of fixed
assets,in the 18thcentury[Yamey,1962,p. 34].
7. Developmentof depreciationaccounting,evidenced as
early as 1588,but maturingin the 19thcentury[Little-
ton, 1933,ChapterXIV].
8. Evolutionof systematiccost accountingmethodsin the
19thcentury[Littleton,1933,ChaptersXX-XXI;Garner,
1954].
9. Develomentof systematicmeans of accountingforpre-
paymentsand accruals to enable carefulcalculation of
periodic profit,in the latter half of the 19th century
[Yamey,1962,pp. 36-37].
10. Developmentoffundsstatements,in the latter19thand
early20thcenturies[Rosen and DeCoster,1969].
11. Developmentof methodsof accountingformergersand
consolidated entities,and methods of accounting for
inflation,both in the 20thcentury.
Each ofthesedevelopmentscontainselementsthatrepresenta
"furtherarticulation"ofthe double-entry accountingparadigm
by its applicationto new sets offacts,or "extending. . . knowl-
edge of thosefacts"by continualrefinement of ways in which
are
they represented within the model.
double-entry In addition,
the term"puzzle-solving"seems a particularlyapt description
of the processby whichtheseextensionsof double-entry book-

TheAccounting
keepingarose and were refined.Furthermore, these develop-

mentsrepresenta more or less continuousevolutionand re-
finementof the double-entry bookkeepingmodel over the past
fourcenturies.It is thereforeconcludedthat,duringthisperiod,
accounting evolved in ways that closely resemble "normal
science" as thattermis definedby Kuhn.
Reflectingon this, one cannot help but be struckby the
resiliencyof the double-entryaccounting paradigm. Over a
period of fourcenturies,as the verynature of business enter-
prises changed and the complexityof business transactions
increased,accountants were able to incorporateall of these
developmentswithinthe frameworkof the double-entry para-
digm. Every new developmentprovided a puzzle requiring
furtherarticulationof the paradigm, and the paradigm pro-
vided the means to solve everysuch puzzle. The accountby Lee
[1975] of the developmentofBritishaccounting,in responseto
the industrialrevolutionand the rise of the limited liability
companybetween 1760 and 1900,providesa classic example of
thispoint.
This interpretation ofaccounting'shistoryis also consistent
with a numberof Kuhn's views about the natureof the para-
digm. For example, consider his definitionof paradigms as
"universallyrecognizedscientificachievementsthatfora time
provide model problems and solutions to a communityof
practitioners"[1970a, p. viii]. The double-entrymodel has
certainly come to be universally recognized and accepted
amongtheinternationalcommunityofaccountants(recall Hat-
field'sreference, cited above, to Pacioli's workas the source of
accounting "in all the modernworld"). Moreover,the double-
entry model providesa frameworkfordefiningthe nature of
accountingproblemsand a methodforapproachingthesolution
of thoseproblems.
Furthermore,
Effectiveresearchscarcelybegins beforea scientific
communitythinksit has acquired firmanswers to
questionslike thefollowing:Whatare thefundamen-
tal entitiesof whichthe universeis composed? How
do theseinteractwitheach otherand withthesenses?
Whatquestionsmaylegitimatelybe asked about such
entities and what techniques employed in seeking
solutions?[pp. 4-5].
The double-entry model providesaccountantswithuniversally
accepted answers to these basic questions. The "fundamental
entities"ofaccounting'suniverseare assets,liabilities,revenues

of theHistoricalEvolutionofAccounting19
and expenses. They interactwith each otheraccordingto the

rules of the double-entrymodel. They interactwith the senses
throughthe observationand recordingof transactiondata.
Legitimatequestionsinvolvesuch mattersas recognition, valu-
ation, and classification; and the double-entry model both
identifiesthese as relevant questions and suggeststhe nature of
the techniquesthat must be used in seeking answers.
Kuhn continuesin this vein:
answers(or fullsubstitutesforanswers)to questions
like these are firmlyembedded in the educational
initiationthat preparesand licenses the studentfor
professionalpractice.Because thateducationis both
rigorousand rigid,theseanswerscome to exerta deep
hold on the scientificmind . . . [normal] research
[may be described]as a strenuousand devoted at-
temptto forcenatureinto the conceptualboxes sup-
plied by professionaleducation[p. 5].
The parallels betweenthese statementsand contemporaryac-
countingeducationand accountingpracticeare apparent.Re-
gardingaccountingresearch,parallels existwithrespectto the
developmentofthe double-entry accountingparadigmoverthe
past four centuries,as outlined above. That such parallels are
not as apparent with respect to contemporaryaccountingre-
search is indicativethat accountingis no longer in a normal
science stage,but has insteadentereda crisis stage.
Kuhn also describeshow a paradigmlimitsthe boundaries
of a disciplinein the mindsof its practitioners:
one ofthethingsa scientificcommunityacquires with
a paradigmis a criterionforchoosingproblemsthat,
while the paradigm is taken for granted, can be
assumedto have solutions.To a greatextenttheseare
the onlyproblemsthatthe communitywill admit as
scientificor encourage its members to undertake.
Otherproblems. . . are rejected as metaphysical,as
the concernof another discipline,or sometimesas
just too problematicto be worththe time [1970a, p.
37].
The double-entryaccountingparadigm providessuch a crite-
rion.Withintheframework ofthe double-entry model,theonly
problems that are relevant involve accounting for exchange
transactionsbetweenthe businessentityand anotherindepen-
dententity,or foreventsthatcan be interpreted as analogous to
exchange transactions (e.g., depreciation, accruals,or cost allo-
cations).

TheAccounting
Kuhn elaborateson thispointas follows,

A paradigm can, forthat matter,even insulate the
communityfromthose socially importantproblems
that are not reducible to the puzzle form,because
theycannotbe stated in termsofthe conceptualand
instrumental tools the paradigm supplies. Such
problemscan be a distraction... [p. 37].
For example,accountantspaid no attentionto the problemof
accountingforhuman resourcesuntil it was shown how this
problem could be addressed within the frameworkof the
double-entry system[Flamholtz,1974].
In summary,thissectionhas comparedthehistoricalevolu-
tion of double-entrybookkeepingto Kuhn's descriptionof the
natureofparadigmsand normalscience.It is concludedthatthe
double-entrybookkeepingmodel has the featuresof an ac-
countingparadigm,as thattermis used by Kuhn,and thatthe
historicalevolutionofaccountingfromapproximatelythe 16th
centuryuntil about 1960 resembles the normal science of
Kuhn's theory.It has also been suggestedthat accountinghas
recentlyentereda crisisstage. In thenextsection,thisinterpre-
tationof accounting'sevolutionis furtherarticulatedby com-
paring current developments in accounting thought with
Kuhn's descriptionofthecrisisstageoftheevolutionarycycle.
ACCOUNTING'S CRISIS AND RESPONSE

Accordingto Kuhn,the crisesthateventuallylead to scien-
tificdiscoveriesand revolutionsbegin "with the awareness of
anomaly,i.e., with the recognitionthat nature has somehow
violatedtheparadigm-induced expectationsthatgovernnormal
science" [1970a, pp. 52-53]. The role of expectationsis crucial.
The paradigm induces all scientists to expect that any new
problem can and will eventually be solved throughthe puzzle-
solving process of normal science. It is the violation of such
expectations that an
represents anomaly and that, if not re-
solved in some way,will eventuallyplungethedisciplineintoa
state ofcrisis.
The descriptionofaccounting'scrisisand responseto crisis
presentedhereresemblesKuhn's generaltheoryin manyways;
these are made explicitin this section. However,thereis one
fundamentaldifference that must be made clear at the outset.
Kuhn's theoryfocuseson how a discipline'scrisis is resolved
throughtheemergenceofa new paradigmand theoccurrenceof
a revolution.However,no competingparadigmforaccounting

has yetemerged,and no otherpotentialsolutionto accounting's

crisis is being pursued.This divergenceof accounting'sevolu-
tion fromthe path Kuhn describespresentssome problemsof
interpretation. Kuhn simplydoesn't discuss how a discipline's
crisis mightdeepen when no competingparadigmemerges.
While the interpretationpresented here follows Kuhn's
theoryas closelyas possible,it has been necessaryto improvise
somewhat.Specifically,it is suggestedthat accounting'scrisis
has consistedof two separate stages. The responseto the first
stage of its crisis was a failure. Gradual recognitionof this
failure precipitateda deeper and more fundamentalcrisis.
Accountingis presentlyin this second stage of crisis,which is
growingmore severeand showingno signs of eventualresolu-
tion. In the remainderof this section,an attemptis made to
build a case in supportofthis interpretation.
By theearlypartofthetwentiethcentury,accountantshad
established a firm set of expectations concerninghow any
accountingproblemwould be resolved.Specifically,practicing
accountants would experimentwith various alternative ac-
countingmethods,and thenthey(or thosewho employedthem)
would selectwhateversuch methodsbest suitedtheirpurposes.
Overtimenew methodswould becomemorewidelyknown,and
some alternativemethods might be discarded while others
became more popular. Accountingwriterswould explain the
more commonlyused methods,thus legitimizingthem and
causing themto be viewed as generallyaccepted.6Virtuallyall
of the historicaldevelopmentsin accountinglisted in the pre-
vious sectionoccurredin a mannersimilarto this.
A naturalbyproductofthisapproach to solvingaccounting
problemswas the proliferationof alternativemethodsof ac-
countingforsimilarphenomena.This would generallynotbe an
acceptableresultofpuzzle-solvingin a scientificdiscipline,but
accountantsthen gave no thoughtto emulatingthe pure sci-
ences. Indeed the flexibilityof the double-entryaccounting
paradigmwas one ofits greateststrengths- it offeredaccount-
ants and businessmanagersnumerouschoices,and provideda
framework withinwhichmostsuch choicescould be reasonably
explainedand justified.
As it evolvedin thismanner,a centralfeatureofaccounting
was thatitexistedalmostexclusivelyto providethemanagersof
businessesand otherorganizationswithinformation relevantto
6Forexample,see thedescriptionsbyChandler[1977]ofthedevelopmentof
railroadaccounting[pp. 109-120]and cost accounting[pp. 278-9,464-5].

22 TheAccounting December1989
HistoriansJournal,
managing the daily operationsof theirenterprises.Thus, ac-

countingmethodswere chosenprimarilyto satisfythe needs of
management.
This patternofresolutionofaccountingproblemsstartedto
collapse in 1907 when the InterstateCommerceCommission
(ICC) began to prescribeuniformmethods of accountingfor
railroads.Otherregulatorybodies weresoon created,and these
followedthe ICC's lead. Accordingto Hendriksen,"regulation
and the demandforuniformity have broughtabout a stiflingof
independent research and experimentation by the independent
companies" [1977,p. 44].
The establishmentofthe corporateincometax in 1913 also
had a significanteffecton accounting.Businessmenwere re-
quired to preparefinancialstatementsas prescribedby the tax
law forthepurposeofdetermining taxable income.Accordingto
Chatfield, "forthe first
time accountingoptionsand accounting
theory became important manyoutsidetheprofession"[1974,
to
p. 207].
By 1934 the Securitiesand ExchangeCommissionhad been
createdand giventhe authorityto prescribeaccountingproce-
duresforcorporationsunderitsjurisdiction.The SEC generally
has notexercisedthisauthoritydirectly,but ratherhas deferred
to standardsettingbodies establishedby theprofession, such as
the AccountingPrinciples Board and the Financial Accounting
StandardsBoard. The idea thatuniformity ofaccountingproce-
dures is desirable carried over fromthe industryregulatory
agenciesto thegeneralstandardsettingbodies. Commenting on
of
theformation theAccountingPrinciplesBoard,Spacek [1961]
fiercelyattacked flexibilityin accountingand defendeduni-
formityas essential to fairness.That this view of accounting
standardsettinghas come to be generallyaccepted is reflected
in the AICPA's discussion of comparability[1973, pp. 59-60],
togetherwiththeirassertionthatcomparabilityis a qualitative
characteristicthat financial reporting"should possess", and
thatthiswas "obvious" and "implicitin any intelligentreport-
ing of information"[p. 57].
The idea that accountingstandardsshould be established
by society,shouldbe imposedupon businessorganizations,and
should be relativelyuniform,representeda violation of the
paradigm-inducedexpectationsthat had previouslygoverned
accounting'sevolution;that is, it was an anomaly. Though it
was not immediatelyapparent,the impactof thisdevelopment
was profound,for it meant that accountingwould no longer
evolve in the way that it had forthe previousfourcenturies.

Both the purpose of accounting,and the people who assumed

responsibilityfor its development,had been radically trans-
formed.The developmentof accounting concepts and tech-
niques would no longerbe primarilyan activityengaged in by
corporateaccountantsand managersto serve theirown ends,
but became an activitydominatedby standard settingbodies
seekingto servesocial ends.
The combinationof governmentregulationand the com-
mitmentto uniformityhas led to a buildup of unresolved
accounting issues that perhaps more closely resemble the
anomaliesofKuhn'stheory.These includeaccountingforleases,
pensions,foreigncurrencytranslation,inflation,deferredcred-
its, executorycontracts,and numerousothertopics addressed
but not adequately resolved by accounting standard setters
duringthepast 20 yearsor so. Overthepreviousfourcenturies,
in the absence of a uniformityconstraint,accountants had
proven capable of resolving issues of this sort within the
framework ofthedouble-entry accountingparadigm.That such
issues can no longerbe resolvedeffectivelyis evidencethatthe
disciplineis presentlyin a crisis stage.
The accountingdiscipline'sresponseto accountingregula-
tion has been examined by Watts and Zimmerman [19791.
Regulationcreateda demand foraccountingtheoriesjustifying
alternativeaccountingmethods;accountingscholarsresponded
to this demand by creating ''accounting theory."The U.S.
SecuritiesActof 1933-34had two major effectson the account-
ing literature,accordingto Watts and Zimmerman[pp. 295-
3001.First,the importanceofmanagementas a primaryuser of
financialstatementsbegan to be downplayed,and the primary
objectiveof accountingwas takento be providinginformation
for external users of financial statements.Second, the acts
stimulateda "search foraccountingprinciples,"commencing
with discussionsin the literatureof the nature of accounting
principlesand leading to theoreticalattemptsto derive such
principlesfroma philosophical base with little referenceto
existingpractice(forexample,Chambers[19661).
The search foraccountingprincipleshas continuedbeyond
theperiodcitedbyWattsand Zimmerman.In the 1960sitsfocus
was the developmentof principlesbased upon postulates,as
exemplifiedby the worksof Moonitz [19611and Sprouse and
Moonitz[19621.In the 1970sthefocusshiftedto establishingthe
objectivesoffinancialstatements,beginningwithAICPA[1973,
19741.The search continuesto this day with the conceptual
frameworkproject of FASB [1985}. Most of the important

TheAccounting
milestones inthisprocessaresummarized froman institutional

perspective by Pacter [1983].
In summary, government intervention intothecenturies-
old process by which accountingmethodsdevelopedand
evolvedrepresented an anomalythatradicallychangedthe
purpose accountingand its mannerof development.
of Never
beforehad thebusiness community been instructed by a central
authority on how to keepits accounts.The occurrence ofthis
anomaly, and the accounting discipline'sresponse, in the form
ofthesearchforaccounting principles, represents the first stage
oftheaccounting discipline'scrisis.7Thisstagepossessessev-
eral of the characteristics of the crisisstage of a scientific
disciplineidentifiedby Kuhn. Theseare nowenumerated.
First,Kuhn suggests thata discipline's crisisis oftenaggra-
vatedby external social pressures. example,he citesthe
For
social pressure for calendar reform in the 16thcenturyas a
factor tothe
contributing urgency of the crisisinastronomy that
eventually culminated in theCopernican Revolution [1970a,p.
69].In the20thcentury societyhasplacedan analogousdemand
upon accounting.Societydemandsmeasuresof incomeand
wealththatcan providean objectivebasis forperformance
measurement, taxation,contracting, and relatedactivitiesthat
areessentialto oureconomy. The search foraccounting princi-
pleshas beenaccounting's response to this demand.In the16th
centuryit graduallybecameapparentthateffective calendar
reform couldnotbe achievedbyfurther ad hoc modification of
thePtolmaicgeocentric view of the universe. Today it is gradu-
allybecomingapparentthateffective reform ofaccounting will
notbe accomplished bythesearchforaccounting principles.
The parallelbetweenaccounting's 20thcentury crisisand
astronomy's 16thcentury crisisis striking in other ways.In The
Copernican Revolution, in
published 1957, Kuhn describesin
detailattempts by astronomers over many centuries to explain
themovements ofcelestialbodiesthrough an evermorecom-
plex seriesof ad hoc adjustments to the methodology of the
Ptolmaicparadigm.In themodernera,it maybe observedthat
theFinancialAccounting StandardsBoard,and itspredecessor,
the Accounting PrinciplesBoard,have soughtto reformac-
counting by means ofan increasingly complexseriesofad hoc
7Theassertionthatregulationtriggered a crisisin theaccountingdiscipline

is not intendedto representa criticismof regulationper se, whichmay have
appropriatesocietalresponseto theprevailingconditions.The
been a perfectly
pointis thataccountingregulationled to fundamental and profoundeffectson
.
accountingas a discipline

oftheHistoricalEvolutionofAccounting25
adjustmentsto themethodology ofthedouble-entry accounting

paradigm.According Kuhn,"Copernicushimselfwrotein the
to
Prefaceto theDe Revolutionibus thattheastronomicaltradition
he inherited had finallycreatedonlya monster"[1970a, p. 69].
Evidence thatcontemporary accountants have similarreserva-
tions about our presentaccounting tradition is found in the
followingstatementrecently made by two accountants involved
in standardsetting, "Wide segments of the businesscommunity
and the accountingprofessionhave become increasinglycon-
cerned about, and critical of, the proliferationover the past
several years of complex and detailed accountingstandards"
[Hepp and McRae, 1982,p. 52].
The parallel continues:"Throughoutthe Middle Ages and
muchofthe renaissancethe Catholicchurchwas the dominant
intellectualauthorityofall Europe. . . . beforethetenthcentury
and again afterthe sixteenththe church's influencewas, on
balance, antiscientific"[Kuhn, 1957, p. 106]. Similarly, ac-
countingthoughthas been dominatedoverthepast 25 yearsby
institutionssuch as the AICPA,the SEC, and now the FASB.
Althoughthese institutionshave been anythingbut antiscien-
tific,theirapproach to accountingreformis influencedmuch
more heavily by political considerationsthan by scientific
theoryor evidence.
Thereare otherparallels betweenKuhn's generaltheoryof
crisisand accounting'scontemporary crisis.Accordingto Kuhn,
whereveran anomaly is highlyresistantto attemptsto resolve
it,"More and moreattentionis devotedto it by moreand more
ofthefield'smosteminentmen.Ifit stillcontinuesto resist,as it
usuallydoes not,manyofthemmaycome to view its resolution
as thesubjectmatteroftheirdiscipline"[1970a,pp. 82-83].This
descriptioneasilyfitstheaccountingdisciplineofthe 1960sand
1970s.The search foraccountingprinciplescame to be viewed
by manyaccountingscholarsas thesubject matterof financial
accounting.Eminentscholars whose works reflecteda strong
commitmentto the quest fora theoreticalfoundationforac-
counting included Bedford [1965], Chambers [1966], Devine
[1960, 1985], Ijiri [1967, 1975], Mattessich [1964], Moonitz
[1961], Sprouse [with Moonitz , 1962], Staubus [1961, 1977],
Sterling[1970b, 1979],and manyothers.
Still anotherparallel is that "proliferationof versionsof
theoryis a veryusual symptomof crisis" [Kuhn, 1970a, p. 71].
Accountingtheoriescertainlyproliferated duringthisera. Wells
[1976,p. 478] identifiesfourschools of thoughtthat are essen-
tially different versionsof accounting theory:price-levelad-

TheAccounting
justed accounting,replacementcost accounting,deprivaivalue

accounting,and netrealizable value accounting.Wellsmentions
a fifthpossibility,present value accounting. Togetherwith
historicalcost accounting,thisprovidesa totalofsix versionsof
accountingtheory.
A finalparallel stemsfromKuhn's assertionthat"frequent
and deep debates overlegitimatemethods,problems,and stan-
dards of solution. . . recur regularlyjust before and during
scientificrevolutions"[1970a, pp. 47-48]. Debates of precisely
this kind in accountingare documentedby SATTA; the three
"paradigms" it identifiedwere not paradigmsat all, but alter-
native approaches to accountingtheorydevelopment.These
debates have been underwayin the accountingliteraturefor
manyyears,accordingto SATTA[Chapter2],beginningwiththe
split between deductivistsand inductivistsin the 1920s and
1930s, and becoming much more pronouncedwith the emer-
gence of behavioral accounting,capital marketsresearchand
informationeconomics in the 1960s and 1970s. These debates
certainly are concerned with the legitimacy of alternative
methodsoftheorydevelopmentand standardsofsolutionofthe
theorydevelopmentissue.
In summary,the firststage of accounting'scontemporary
crisis,labelled here (followingWatts and Zimmerman[1979])
the search foraccountingprinciples,has a numberof parallels
withthecrisesin scientificdisciplinesdescribedby Kuhn [1957,
1970a].The effects ofthesearchforaccountingprincipleson the
accountingdisciplineare now examined.
One importantbyproductof the search for accounting
principleshas been a commitmenton the part of many ac-
countingscholars to a more scientificapproach to theirdisci-
pline. This was perhaps firstmanifestedby the deductivist-
inductivistdebates mentionedabove. It gatheredmomentumin
the 1960s and early 1970s as prominentaccountingscholars
such as Mautz [1963] and Sterling[1975] advocated a more
scientificapproach to accounting.And it has culminatedin the
past 20 years with an explosion of empirical research in ac-
counting,researchthatattemptsto emulateas closelyas possi-
ble the methodsfollowedby more maturesciences. It is clear
that today's most active accountingresearchersidentifywith
the ideals of science and would like to be consideredas scien-
tists.
In other importantrespects,however,the search for ac-
countingprincipleshas been a failure.As thissearchproceeded
throughyears and thendecades withfewsigns of a successful

outcome,twothingsgraduallybecameapparentto accounting
scholars.The firstis thateven if an ideal set of accounting
principlesor standardscould somehowbe derived from
"theory" or "science/'it was veryunlikely thatthesewouldbe
implemented. The establishment ofaccounting principlesand
standards hadbecomefirmly entrenched intherealmofpolitics
[Solomons,1978].Theclashofcompeting interestswouldoften
determinethe outcome[Zeff,1978].The role of traditional
accountingtheorieswas merelyto provideexcusesor propa-
ganda that competinginterestscould use to advance their
causes[Wattsand Zimmerman, 1979].Indeed,in thisenviron-
ment,rationalselection ofnormative accounting standardswas
impossible[Demski,1973,1974].
Another thingthatbecameapparenttoaccounting scholars
was evenmoreunsettling, and contributed to thedeepening of
accounting's crisis.It was thataccounting was inherentlyarbi-
trary.Generally acceptedaccounting principleshad growninto
a network ofrules,increasingly resembling incometaxregula-
tionsin length,complexity, and arbitrariness.Traditionalap-
proachesto theselectionofaccounting principleslackedrigor-
ous theoreticalunderpinnings [Gonedesand Dopuch,1974].
Thomas[1969,1974]arguedconvincingly thattheallocations
centralto conventional financialaccountingare irremediably
arbitrary.Ifthesethingsweretrue,thentheattemptto forgea
linkbetweenscienceand accounting theorycouldnotsucceed}.
Accounting scholarsaspiredto be scientists,buttherecouldbe
no scienceofaccounting forthemto practice!
Theseconditions- the politicization of accounting, the
impossibilityof accountingstandardswithinthe existing
milieu,the inherentarbitrariness of accounting, and the in-
terpretation oftherole ofaccounting scholarsas manufacturers
ofexcuses- represented fundamental anomaliesforaccounting
scholarsbythemid-1970s. Theygradually ledaccounting schol-
ars to realizethatthedevelopment ofaccounting conceptsand
techniques withina regulatory contextdominatedbypolitical
considerations was incompatible withtheapplicationofscien-
tificmethodology to accounting.8 In essence,the further de-
velopmentof accountingthoughtalong traditionallines was
now irreconcilable withtheideals of sciencethataccounting
scholarshad fervently embraced.The malaiseengendered by
8Kuhnmakesthesame point:"One ofthestrongest, ifstillunwritten,

rules
ofscientificlifeis theprohibitionofappeals to heads ofstateor to thepopulace
at largein mattersscientific"[1970a,p. 168].

TheAccounting
thisrealizationwas exacerbatedbygrowingdiscontentwiththe
increasinglycomplex and arbitrarylabyrinthof officialac-
countingpronouncements. These conditionsled the accounting
a
disciplineinto deeper and moreseverestateofcrisis,whichis
here labelled the second stage ofaccounting'scrisis.This stage
resembles in some ways Kuhn's descriptionof a scientific
discipline'sresponseto crisis [1970a, ChapterVIII]. These are
now enumerated.
Accordingto Kuhn,"All crisesbeginwiththe blurringofa
paradigmand the consequentlooseningof therules fornormal
research"[1970a,p. 84]. Accountinghas certainlyexperienceda
changein therulesfornormalresearchduringthepast 25 years.
In the 1960s normal accountingresearchinvolvedarticulating
thedouble-entry paradigm,oftenreferred to as a prioriresearch
(Nelson,[1973]). In the 1980s the rulesconcerningwhat consti-
tutes"normal" accountingresearchare certainlymuch looser,
encompassingbehavioralexperiments,information economics,
and empirical studies of capital markets.The relationshipof
such researchto the double-entry accountingparadigm is also
less clear than it was forthe researchof the 1960s.
Kuhn goes on to say that"researchduringcrisisverymuch
resembles research during the pre-paradigmperiod" [p. 84].
Earlier in Structurehe had describedresearchduringthe pre-
paradigmperiod as follows:
all of the facts that could possibly pertain to the
developmentof a given science are likely to seem
equally relevant.As a result,early fact-gathering is
usually restrictedto the wealthofdata thatlie ready
to hand. The resultingpool of facts contains those
accessible to casual observationand experimentto-
getherwithsome ofthemoreesotericdata retrievable
fromestablishedcrafts[p. 15].
Contemporaryaccountingresearchbears some resemblanceto
pre-paradigmresearchas describedhere.It uses readilyacces-
sible data, such at that obtained from published financial
statements,securityprices,surveys,and experiments.All such
data seem equally relevant,because there is no scientifically
accepted accountingparadigm that identifiescertainkinds of
data as mostrelevant.
Kuhnelaborateson theworkofa scientistduringa discipli-
narycrisis:
He will,in thefirstplace, oftenseem a man searching
at random,tryingexperimentsjust to see what will
happen,lookingforan effectwhose naturehe cannot

quite guess. Simultaneously,since no experiment

canbe conceived without some sort of theory,the
scientist in crisis will constantlytry to generate
speculativetheories. . . [1970a, p. 87].
If one examines empirical accounting research studies pub-
lishedwithinthe past 20 years,one oftenobservesa discussion
of "theory development" that provides a rationale and a
frameworkfor the empirical work. An AmericanAccounting
Associationpublication on research methods includes theory
developmentas one of eightsteps thatshould be performedin
empirical work on an accounting research problem [Abdel-
khalikand Ajinkya,1979, p. 10]. Thus thereis a resemblance
between contemporaryaccounting research and Kuhn's de-
scriptionof researchduringcrisis.
One othereffectofcrisis,accordingto Kuhn,is that"some
menhave undoubtedlybeen drivento desertsciencebecause of
theirinabilityto toleratecrisis" [1970a, pp. 78-79]. This com-
mentgives rise to an importantinsightconcerningthe nature
and depthoftheaccountingdiscipline'scurrentcrisis.Contem-
poraryacademic accountants have not deserted science, but
they have in a fundamentalsense deserted accounting.The
majorityoftheresearchin today'sleadingacademic accounting
journals applies the Researchparadigms of economics and
psychologywithinthe institutionalsettingof accounting.Ac-
countingscholars have committedthemselvesto science, but
having come to realize that accountinghas no scientifically
valid paradigm to providea basis forscientificresearch,have
chosento practiceothersciencesthatdo have such paradigms.
This assertionis supportedby a comparativeanalysisofthe
papers publishedin the 1988 and 1960 volumesoí TheAccount-
ing Review,Of the 19 researchpapers appearing in the "Main
Articles"sectionofthe 1988 volume,nonecould be classifiedas
based primarilyupon an accounting research paradigm, as
comparedto twelvethat applied an economicsparadigm,and
three that applied a psychologyparadigm.9 A comparable
analysisofthe 1960 volumeofTheAccounting Reviewidentified
9Forpurposesofthisanalysis,a paper was classifiedwithinan accounting

researchparadigm if it purportedto contributeto a theoryexplainingthe
economicperformance of businessentities.A paper was classifiedwithinan
economicresearchparadigmifit purportedto contributeto a theoryexplaining
thebehaviorofmarketparticipantssubjectto resourceconstraints. A paperwas
researchparadigmifit purportedtocontributeto
classifiedwithina psychology
a theoryexplainingthe behavior of individualsin termsof their personal
and environmental
characteristics influences.

TheAccounting
34 of 40 major articles as associated with an accountingre-

search paradigm.10
Thus, many contemporaryaccountingscholars appear to
believethatscientificaccountingresearchinvolvesthe applica-
tion of scientificresearchparadigmsfromrelatedfieldsto the
studyof accountingpracticesand institutions.The epitomeof
thisapproachto accountingresearchis seen in thestatementby
Wattsand Zimmermanthat"The objectiveofaccountingtheory
is to explainand predictaccountingpractice"[1986,p. 2]. Years
ago, Sterlingreferred to such an approachas the"anthropologi-
cal theoryof accounting"and properlycriticizedit as "not a
theoryabout accountingor a theoryabout the thingsto be
accountedfor;insteadit is a theoryabout accountants"[1970a,
p. 449].n Watts and Zimmerman'spositiveaccountingtheory
utiliziestheparadigmofneoclassicaleconomics,ratherthanan
accounting paradigm. Positive accounting research has cer-
tainlyyieldedsome interesting, and perhapsimportant, insights
regarding the behavior of practicingaccountants,but it tellsus
littleabout the behaviorofthephenomenathataccountinghas
traditionally been concernedwith:theeconomicperformance of
businessenterprises.
This interpretation is helpfulin explainingwhy account-
ing's crisis does not resemble certain key featuresof Kuhn's
disciplinarycrises. For example, Kuhn describes the crisis
period as "a period of pronounced professionalinsecurity"
[1970a,pp. 67-68].This descriptionmayhave been applicable to
theaccountingdisciplinein thelate 1960sand early1970swhen
manyleadingaccountingscholarswerecommittedto thesearch
foraccountingprinciplesbut were also unsureof its ultimate
success. However,it does not seem equally applicable today.
The reason is that the majorityof contemporaryaccounting
scholars have acknowledgedthat accountingis inherentlyun-
scientific,have chosen to practiceothersciences instead,and
have experiencedsome success. Accountingscholarshave shed
their insecurityalong with their discipline; they have found
10Vasarhelyi,Bao and Berk [1988] presentresultsof a similar,but more

comprehensive, trendanalysis.Theyreporta significantdecrease in published
articlesdealingwithan accountingtheory"school ofthought"over theperiod
1963-1984,but a significant increasein publishedarticlesusingaccountingas a
"foundation discipline."Because theydo notexplaintheirclassification
criteria,
theirresultswithrespectto theissue addressedhere.
to interpret
it is difficult
nMore recently,Christenson[1983, pp. 3-6] makes preciselythe same
criticismofWattsand Zimmermanand otherpositiveaccountingtheorists.

securityby practicingnormal science withinthe more highly

developed paradigms offeredby other disciplines related to
accounting.
Similarly,Kuhn argues thata scientistin crisis"will push
the rules of normal science harder than ever to see . . . just
whereand how fartheycan be made to work" [1970a, p. 87].
Recall that what formerlypassed for normal science in ac-
countingwas the manipulationofthe double-entry model to fit
new kindsoftransactionsor conditions.Again,Kuhn's descrip-
tion may fitwhat manyaccountingscholars were doing until
approximately1970,and it mayalso describewhat the FASB is
doing today,12but it certainlydoes not describe what the
majorityof today's leading accountingscholars are doing. For
themostpart,today'saccountingscholarshave gonebeyondthe
pointof attemptingto solve accounting'sproblemswithinthe
framework of the double-entryaccountingparadigm.
In summary,thesecondstageofaccounting'scrisishas two
keyfeatures.First,most leading accountingscholars have em-
braced a scientificapproach to research.Second, this has led
manyofthemaway fromstudyingthephenomenaoftraditional
concernto accounting(e.g., the economicperformanceof busi-
ness enterprises),in favorofresearchwithinthenormalscience
paradigmsof disciplinesrelatedto accounting.Thus the disci-
pline's leading scholarsno longerdisplaya paramountinterest
in the fundamentalissues that distinguishaccounting from
otherfields.This suggeststhataccounting'spresentcrisisis not
onlysevere,but possiblyfatalto accountingas a viable branch
of knowledge.
THE LESSONS OF HISTORY:

HOW CAN ACCOUNTINGRESOLVE ITS CRISIS?
Kuhn offerssome insightfulobservationsconcerninghow
the crises in scientificdisciplines are resolved. This section
offerssome reasonedspeculationconcerninghow thelessonsof
Kuhn's historyof science may provide insightto the possible
futureevolutionof the accountingdiscipline.
12Itcould be argued that even the FASB has deserted the traditional
accountingparadigm,in thatmoreand moreaccountingissuesare resolvedby
recommendingadditional disclosures (as recommendedby Beaver [1973])
ratherthan by imposingone of many alternativemethodsof reportinga
transactionwithintheconventionalfinancialstatementframework.

32 TheAccounting
Kuhn assertsthat,
all crises close in one of three ways. Sometimes
normal science ultimatelyproves able to handle the
crisis-provoking problemdespitethe despairofthose
who have seen it as the end of an existingparadigm.
On otheroccasions the problemresistseven appar-
ently radical new approaches. Then scientistsmay
conclude that no solutionwill be forthcoming in the
presentstate of theirfield.The problem is labelled
and set aside for a futuregeneration with more
developed tools. Or ... a crisis may end with the
emergenceofa new candidateforparadigmand with
the ensuingbattleover its acceptance [1970a, p. 84].
Each ofthesethreepossiblewaysofresolvingaccounting'scrisis
is now brieflyexamined.
First,is it possible foraccountingto resolve its problems
withinthe frameworkof its existingnormalscience paradigm,
the double-entrymodel? One possibilityis to reformthe ac-
countingstandard-setting processto providegreaterparticipa-
tion by management, and to permitgreaterflexibilityin ac-
counting method choice. This has been proposed by Flegm
[1984], whose explanation of how regulationtriggeredaccount-
ing's current problems is similar to the analysis presentedin
thispaper. This is a reactionary solution thatwould attemptto
solve the crisis by restoring the conditions thatexistedpriorto
it. There is no reason to expect that any such "reform"of
is
accountingstandard-setting likely.
Anotherpossibilityis to adapt scientificmethodologyto the
double-entry model. Specificproposalsfordoingthishave been
put forth by Mattessich [1964] and Sterling[1979]. Mattessich
suggests that accountingshouldbe a managementscience,and
presents a set of eighteenbasic assumptionswhichhe assertsare
"rigorousenoughto formthe keyto a generaltheoryofaccount-
ing" [p-426]. Sterlingsuggeststhata scienceofaccountingmust
"adopt the objectiveofreportingfiguresthatrepresentempiri-
cal phenomena" [p. 213], and recommendsaccountingforexit
values as a means of accomplishingthis.
A thirdpossibilityis foraccountantsto focustheirattention
on thedesignofaccountingsystemsto servemanagement.Such
an approach has been suggestedby Johnsonand Kaplan, who
argue that managementaccountingsystemshave been sub-
vertedby attemptingto extractinformationfor management
planningand controlfromthefinancialaccountingsystemthat
is designedto satisfyexternalreportingand auditingrequire-

ments [1987, p. 261]. This approach is promisingbecause it

offersaccountantsan opportunityto developusefulaccounting
methodswithoutconcernforthe political constraintsimposed
by the standard-settingprocess. Taken to its extreme,this
approach would view financialaccountingstandardsin much
the same way that tax accountingrules are now viewed - as
importantfor a narrowlydefinedpurpose,but as essentially
unrelatedto accounting'scentralrole ofprovidingusefulinfor-
mationto management.
"
A fourthpossibilityis to implementthe data-base ap-
proach to corporatefinancialreporting"proposed by Beaver
and Rappaport [1984, p. 16]. Under this approach, public
corporationswould recordthe data needed to prepareconven-
tional financialstatementsand other analyses in a data base
accessible to externalusers,who could thenemploytheirown
individualmethodsof valuation,aggregation,etc., in order to
evaluate the corporation'sactivities.13 By vastlyexpandingthe
empirical data set available to public examination,this ap-
proach would make it possible address many fundamental
to
accounting issues on a scientificbasis. This approach therefore
has muchpromise as an avenue for accountingto emergefrom
its presentcrisis,though implementationmay not be politi-
its
cally feasible.
A second matterin which a crisis may end, accordingto
Kuhn,is fortheproblemto be set aside forfuturegenerations.In
the previoussectionof this paper, it was argued that account-
ing'scrisisis notonlysevere,but possiblyfatalto accountingas
a viable branchofknowledge.Therefore, thiswould notseem to
be a satisfactory way to deal with the crisis.
Finally,Kuhnsays thata crisismayend withtheemergence
of a new candidate forparadigm.Recentaccountingliterature
furnishestwo possible candidates to replace the double-entry
accountingparadigm. One is Ijiri's [1982] triple-entry book-
keeping.However,Ijiri frequentlyrefersto his proposal as an
extensionofdouble-entry bookkeeping,and so it probablylacks
the essentialfeatures of a competingparadigm.
Anotherpossible candidate is matrixaccounting,as sug-
gested by Mattessich[1957], Corcoran[1964] and Koshimura
[1988].This approach proposesto alter muchof the traditional
double-entryprocessingmethodology.However,it retainsthe
13Thetheoreticalbasis forthisproposalwas providedby Sorter[1969].The

possible consequencesof such an approach have recentlybeen examinedby
Cushing[1989].

TheAccounting
fundamentallogic of the double-entryaccountingparadigm,

includingthe treatmentof transactionsas the phenomenonof
primaryinterest,theequalityofdebitsand credits,and the use
of the balance sheet and income statementequations as an
underlying framework foranalysisoftheeconomicperformance
of business entities. Thus it is also properlyviewed as an
extensionofdoubleentry,ratherthanas a competingparadigm.
If the double-entrybookkeepingsystem is the basis of
accounting'scurrentparadigm,then presumablya new para-
digm would not be based on double entry.But is it possible to
conceive of accountingwithoutthe double-entrybookkeeping
system? Double-entryledgers certainly provide a suitable
methodforkeeping track of cash, receivables,payables, and
othersimilaritems,and it is likelythattheywill continueto be
used to accountforsuch items.But is double entrytheonlyway
to address accounting'smoregeneralproblemof makingsense
out of the economic performanceof individuals or groups
responsibleforthe utilizationofeconomicresources?
Double entrymayhave been well-suitedto thebookkeeping
problems of 16th centurymerchants,but is it equally well-
suited to the accountingproblemsof large,complexcorporate
enterprisesin the 20th century?Do the conceptsof net worth
and net incomethatare the focusofcontemporary application
ofthe double-entry accountingparadigmhave any meaningfor
large,complex corporateenterprises?Or do theymore nearly
resemblewhat Kuhn [1970a, p. 104] refersto as the "occult
qualities" oftenassociated with dyingparadigms? The latter
view is consistentwith the conclusionsof Beaver and Demski,
who suggestthat the case forthe accrual conceptof incomeis
"problematical"[1979,p. 45]. Does thelogicof,thedouble-entry
model reflecta general scientifictruthunderlyingbusiness
operations,as suggestedby Mattessich[1984,p. 408], or does it
more nearly resemble the "metaphysical speculation" that
Kuhn [1970a, p. 103] also associates withdyingparadigms?
It is helpfulin answeringthese questions to note that the
double-entry model is not essentialto the proposalsofJohnson
and Kaplan [1987] or those of Beaver and Rappaport [1984].
Both of these proposals imply that the data most relevantto
managersor externalusers will be processedin whateverway
makes the mostsense to thoseusers.The relevantdata may be
obtainedin transactionsand othereconomicevents,but trans-
actions would not necessarilybe the dominantsource of data.
Furthermore, themethodofprocessingthesedata could employ
scientificallyvalid methods of explaining and predicting

phenomenaof interestto management.Thus, either of these

proposedapproacheswouldenable accountingscholarsto apply
their newly embraced skills in scientificmethodologyto the
developmentof a new accountingparadigmthat would super-
sede the double-entry bookkeepingmodel. Accountingscholars
wishing practice scientistswould thenno longerhave to
to as
settleforrefining theparadigmsofrelateddisciplineswithinan
accounting context.
To pursue this idea one step further,accountingmay be
redefinedin scientificterms as the science that attemptsto
explainand predicttheeconomicperformance ofindividualsor
groupsresponsible for the utilization of economic resources.In
the context of a public corporation, relevant performancevari-
ables would include cash flows, stock prices,dividends,bank-
ruptcies,mergersand acquisitions. Relevant explanatoryvari-
ables would encompass various features of the corporation's
human, physical, and financial resources, its environmental
context,and its managerialstrategies and policies. The science
of accountingwould employ the tools of scientificresearch
methodology, includinglogic,mathematics, controlled observa-
A
tion,and statisticalinference. primary criterion for judging
the relevanceof researchvariables to the scienceofaccounting
would be whetheror not theyrepresentreal and empirically
verifiable phenomena. Because traditional accounting con-
structssuch as netincomeor networthdo notmeetthistest,the
double-entry bookkeepingmodel could not be the centralfocus
of thisaccountingscience.
Is thisdefinition ofaccountingconsistentwithaccounting's
traditionalobjective of providinguseful informationto man-
agement?Is it consistentwith accounting'scontemporaryob-
jective of providingusefulinformationto investorsand credi-
torsforsuch purposesas predictingcash flowsand evaluating
managementstewardshipand performance? Ofcourse!Surelya
sciencethatcould offeraccurateexplanationsand predictionsof
the performanceof managers and corporate organizations
would be of great relevance to accounting's traditionaland
contemporary objectives.
Kuhn offersthe followinginsightto the transitionfromold
to new paradigm:
the receptionof a new paradigmoftennecessitatesa
redefinition of the correspondingscience. Some old
problems may be relegated to another science or
declared entirely"unscientific."Others that were
previouslynon-existentor trivial may, with a new

TheAccounting
paradigm,become the veryarchetypesof significant

scientificachievement[1970a, p. 103].
If the double-entryparadigm were to be displaced by a new
science of accounting,the traditionalaccountingproblemsof
recognition,allocation,classification,valuation,etc.,would be
recognizedas unscientificand would fade in importance.Re-
search using traditionalaccountingvariables such as net in-
come, net worth,depreciation,goodwill, and allocated costs
would no longer be accepted as scientificallyvalid, because
these variables do not correspondto any real, empirically
verifiablephenomena.Instead,a new constellationof account-
ing variableswould be defined,perhapsencompassingsome of
thevariablesnow incorporatedintothedouble-entry model,but
also going beyond double-entry to include such factors as
organizationstructure, reward systems,leadershipstyles,com-
petitivestrategies,corporatecultures,and relatedvariablesthat
may contributeto explaining the economic performanceof
individualsor groupsresponsiblefortheutilizationofeconomic
resources.
Describingthe 19thcenturyrevolutionin chemistry, Kuhn
identifiesone ofthe primary effectsof a scientificrevolution as
follows:"The data themselves had changed. That is the last of
the senses in which we may want to say that after a revolution
scientistswork in a differentworld" [1970a, p. 135]. This
suggeststhatan accountingrevolutionin whichthe dominance
ofthedouble-entry paradigmis overthrown is notonlypossible,
but is also consistent with the pattern evolution of other
of
scientificdisciplinesdocumentedby Kuhn.
SUMMARY AND CONCLUSIONS

Carefulstudyof The Structureof ScientificRevolutionsto
identifythe essence of Thomas Kuhn's conceptof a discipline's
paradigm leads to the conclusionthat the accountingconcept
which most closely resemblesa paradigm is the double-entry
bookkeepingmodel. By exploringthe implicationsof this in-
sight,the followingconclusionsare obtained.
First,a briefexaminationof accounting'shistoryindicates
that the double-entrymodel has been remarkablyresilient.It
has provencapable of assimilatingmajor changes in economic
conditionsand patternsofcommercialactivityovera periodof
fourcenturies.In the absence of the governmentintervention
intoaccountingstandardsettingthathas characterizedthe20th
century,the double-entry model maywell have been capable of

assimilating current and futuredevelopments foran indefinite

period.
Second,theadventofaccounting standard-setting radically
transformed thenatureofaccounting, and precipitated a crisis
in the accountingdiscipline.Accounting's initialresponseto
thiscrisiswas the"searchforaccounting principles." Thiswas
followed closelybya growing commitment toempiricalscience
on thepartof leadingaccountingscholars.The failureofthe
searchforaccounting led to a moreseverecrisisthat
principles
presently holdssway.Thiscrisisis characterized by fourfun-
damentalproblemsthatcannotbe resolvedin a scientifically
acceptablemannerwithinthecontextof thedouble-entry ac-
counting paradigm.Theseare that(1) accounting is inherently
arbitrary[Thomas, 1969, 1974], (2) accountinghas been
politicized [Solomons,1978;Zeff,1978],(3) rationalselectionof
normative accountingstandardsis impossible[Demski,1973,
1974],and(4) theroleofaccounting scholarshas beentosupply
"excuses"to competing groupsseekingto influence accounting
standardsto further theirown interests [Wattsand Zimmer-
man,1979].Themostdevastating effect oftheseconditions has
beenthatmanyoftoday'sleadingaccounting scholarsnolonger
displayan interestin addressingthe fundamental issues of
accounting, buthaveinsteadgravitated towardthemorescien-
tificallysatisfying studyofparadigmsin otherdisciplinesthat
are relatedto accounting.
Third,thereexistsome promisingavenuesby whichac-
counting's presentcrisiscouldbe resolved.Manyoftheseare
alreadybeingexplored.Butperhapsthemostintriguing possi-
bilityis theoccurrence ofa revolutioninwhichthedouble-entry
bookkeeping modelwouldbe discardedas thecentralfeature of
accounting's paradigm, andaccounting wouldbe redefined as a
truescientific discipline.
Fourth,it is concludedthatKuhn'sStructure ofScientific
Revolutions is profoundly relevantto accounting, indispensable
in helpingus to understandthe historyof the accounting
discipline andtocomprehend howitmightevolveinthefuture.
REFERENCES
A. R. and B. B. Ajinkya,EmpiricalResearchin Accounting:A
Abdel-khalik,
MethodologicalViewpoint,AccountingEducation Series, Volume No. 4
(AmericanAccountingAssociation,1979).
AmericanAccountingAssociation,Committeeon Conceptsand Standardsfor
ExternalFinancial Reports,Statementon AccountingTheoryand Theory
Acceptance(AmericanAccountingAssociation,1977).

TheAccounting
AmericanInstituteof CertifiedPublic Accountants,Objectivesof Financial

Statements (AICPA,1973).
, Objectivesof Financial Statements,Volume 2/SelectedPapers
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The Academy of Accounting Historians

A KUHNIAN INTERPRETATION OF THE HISTORICAL EVOLUTION OF ACCOUNTING

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The purpose of this paper is to examine the historical

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worksis more credible.However,Kuhn's workwas chosen as

*Forexample, Guttingasserts that Kuhn's Structure"has had a wider

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theoryof the crises and responsesto crisis thatoccur in scien-

2ForKuhn's personalaccountof the developmentof his ideas, see his The

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Gilman [19391,Sanders,Hatfieldand Moore [1938],and Paton

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period priorto 1930 to Kuhn's pre-paradigmstage, ?.ndiden-

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theory.Of course the purpose of SATTA was to summarize

4This is the publishedversionof Previts'1972 Ph.D. dissertationat the

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the evolutionin accountingthoughtfroma pure historicalcost

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accounting systems designedtoachievedifferent objectives. His

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This paper attemptsto augmentthe existingliteratureby

DOES KUHN'S THEORY APPLY TO ACCOUNTING?

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Kuhn'stheory to learnsomething usefulabouttheevolution of

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demarcation criterion between science and non-

WHATIS ACCOUNTING'S PARADIGM?

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entificspecialty" [p. 177].Thusthewaytoidentify a paradigmis

This content downloaded from 194.214.27.178 on Fri, 23 Aug 2013 01:56:32 AM

This content downloaded from 194.214.27.178 on Fri, 23 Aug 2013 01:56:32 AM

The double-entry bookkeepingmodel is richwithsymbolic

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enhancethewealthofitsowners,and therefore thattheprimary

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eitherin theoriginalor in translationsor adaptations,

This content downloaded from 194.214.27.178 on Fri, 23 Aug 2013 01:56:32 AM

double-entrymodel has evolved in ways that closely resemble

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keepingarose and were refined.Furthermore, these develop-

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and expenses. They interactwith each otheraccordingto the

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Kuhn elaborateson thispointas follows,

ACCOUNTING'S CRISIS AND RESPONSE

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has yetemerged,and no otherpotentialsolutionto accounting's

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managing the daily operationsof theirenterprises.Thus, ac-

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Both the purpose of accounting,and the people who assumed

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milestones inthisprocessaresummarized froman institutional

7Theassertionthatregulationtriggered a crisisin theaccountingdiscipline

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adjustmentsto themethodology ofthedouble-entry accounting

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justed accounting,replacementcost accounting,deprivaivalue

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8Kuhnmakesthesame point:"One ofthestrongest, ifstillunwritten,

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