GODFREY

HODGSON
HOLMES
TARCA

CHAPTER 1
INTRODUCTION
 Sesi 1 :
Rencana kelas (class arrangement)
• Perkenalan
• Format kelas
– Kuliah + presentasi
– Kehadiran
• Studi Mandiri Terpandu (Independent
learning)
• Etika (sikap, suara, makanan)

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 Sesi 1 :
Rencana kelas (class arrangement)
• Penilaian
– Ujian (30 + 30)?
– Praktek (40%)
• HDR (Kehadiran) – 4%
• SKP – 8%
– Aktifitas kelas (diskusi, komentar) - 3%
– Presentasi – 5%
• KUIS – 14%
• TUGAS (CRITICAL READING) – 14%
• Konsultansi di luar kelas – WA, email
• Apa lagi?
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 Sesi 2: LO 1
Overview of Accounting Theory

Short Quiz 1:

•Apa sih “Ákuntansi”?

– Ilmu pasti atau ilmu eksakta?

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 Sesi 2: LO 1
Overview of Accounting Theory
Alternatif:
•Calculative rationality of capitalism
– A deduction of the production process (Marx)
– “… modern, rational organization of capitalistic enterprise would not
have been possible, Weber argued, without the calculative practice of
bookkeeping..”
– Double entry bookkeeping enabled the rise of capitalism (Sombart)
•A technology of Governing
– Accounting is more than technical process but organizational &
behavioral

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 Apa Akuntansi
Suwardjono (2005),
Akuntansi bisa dipandang sebagai …
•Ilmu
•Teknologi
•Seni
– Peran Teori Akuntansi untuk masing-masing
perspektif?

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Overview of Accounting Theory
What is a theory?
Hendriksen’s definition:
…the coherent set of hypothetical, conceptual and
pragmatic principles forming the general
framework of reference for a field of inquiry.

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Overview of Accounting Theory
What is an accounting theory?
Hendriksen’s definition:
…logical reasoning in the form of a set of broad
principles that
• provide a general framework of reference by
which accounting practice can be evaluated and

• guide the development of new practices and

procedures.

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Accounting Theory is defined as

• the basic • the reporting of

– assumptions – accounting and
– definitions – financial information
– principles and • applicable to financial
– concepts that underlie accounting, not to
the rule making by a – governmental or
legislative body
– managerial
 Accounting Theory includes

• Conceptual
Frameworks
• Accounting Legislation
• Concepts
• Valuation Models
• Hypotheses and
Theories
Overview of Accounting Theory
• Whether a theory is accepted depends on
how:
– well it explains and predicts reality
– well it is constructed both theoretically and
empirically
– acceptable its implications are

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Accounting Theory & Policy Making

• 3 inputs to policy making function

– Accounting Theory
– Political Factors
– Economic Conditions
• Once policy is made
– Accounting Practice implements the policy
– Users observe effects of implementation
Accounting Political Economic
Theory Factors Conditions

Accounting
Policy Making

Accounting Audit
Practice Function

Users
of Accounting
Data and Reports
Overview of Accounting Theory
• Accounting theory is a modern concept
compared to mathematics or physics
• Even Pacioli’s treatise on double-entry
accounting focused on documenting
practice and did not explain the underlying
theoretical basis for it

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Overview of Accounting Theory
The development of accounting
theory has been mostly unstructured

Chambers:
Accounting has frequently been described as a
body of practices which have been developed in
response to practical needs rather than by
deliberate and systematic thinking.

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Overview of Accounting Theory
• Was developed to resolve problems as they
arose – reactive
• Ad hoc approach
• Led to inconsistencies in practice
– e.g. different depreciation methods
• Accounting standard setting
– Conceptual framework projects have not resolved
inconsistency in practice

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Pre-theory (1400s – 1800)

Goldberg:
No theory of accounting was devised from the time
of Pacioli down to the opening of the nineteenth
century.

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Pragmatic accounting (1800– 1955)
• The ‘general scientific period’
– based on empirical observation of practice
– provided an explanation of accounting practice
– focused on the existing ‘viewpoint’ of accounting

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Normative accounting (1956-1970)
• Sought to establish ‘norms’ for the best
accounting practice
• Focused on what should be (the ideal) v.
what is

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Positive accounting (1950 to the
present day)
• Had its origins in the ‘general scientific period’
• Seeks to explain the accounting practices being
observed
• Its objective is to explain and predict accounting
practice
e.g. the bonus plan hypothesis
• Helps predict the reactions of ‘players’ (users) to the
actions of managers and to reported accounting
information

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Recent developments
• Academic and professional developments in
accounting theory have tended to take
different approaches
• Academic research focuses on capital markets,
agency theory and behavioural aspects
• The profession has sought a more normative
approach – what accounting practices should
be adopted

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Recent developments

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Recent developments
• Conceptual framework – resurrected in 1980s
– states the nature and purpose of financial reporting
– Establishes criteria for deciding between alternative
accounting practices
– Joint Project IASB - FASB
• Conceptual Framework – 2018
– Conceptual Framework for Financial Reporting – IASB
– Kerangka Konseptual Pelaporan Keuangan - IAI

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Recent developments
• The conceptual framework underpinning the
IFRS favours a move toward
– accounting practices that provide information for
enhancing decision making by investors and
others
– recognising all gains and losses in the accounting
periods in which they occur
– measurement using exit values

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 Sesi 3: LO 3
Accounting: A science?

Short Quiz:

•How many inventory methods??

•How many depreciation methods?
 How many “versions” of FS?
 Extrapolate for X accounts, Y methods?

 any thoughts?

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Different perspectives
• Scientific* approach:
– has an inherent assumption that the world to be
researched is an objective reality
– is carried out by incremental hypotheses
– has an implied assumption that a good theory
holds under circumstances that are constant
across firms, industries and time

* Science = sains = ilmu pasti <> ILMU

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Different perspectives
• Criticism of the scientific method:
– large-scale statistical research tends to lump everything
together
– it is conducted in environments that are often remote from
the world of or the concerns of accountants
• Naturalistic approach:
– implies that there are no preconceived assumptions or
theories
– focuses on firm-specific real-world problems

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Different perspectives

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Different perspectives
• Alternative ways of looking at the world:

CATEGORY
CATEGORY ASSUMPTION
ASSUMPTION
1.
1. Reality
Realityas
asaaconcrete
concretestructure
structure
2.
2. Reality
Realityas
asaaconcrete
concreteprocess
process
3.
3. Reality
Realityas
asaacontextual
contextualfield
fieldof
of information
information
4.
4. Reality
Realityas
asaasymbolic
symbolicdiscourse
discourse
5.
5. Reality
Realityas
asaasocial
social construction
construction
6.
6. Reality
Realityas
asprojection
projectionof
ofhuman
humanimagination
imagination

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Different perspectives
• For categories 1 – 3 it is more appropriate to
use the scientific approach

• For categories 4-6 the naturalistic approach is

more appropriate

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Scientific approach applied
to accounting
Misconceptions of purpose
• Make scientists out of accounting practitioners
• Researchers = practitioners
• The desire for ‘absolute truth’
• The scientific method does not claim to provide
‘truth’
• It attempts to provide persuasive evidence
which may describe, explain or predict

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Content outline
• Part 1: Accounting theory (chapters 1 – 3)
– Suwardjono Bab 2: Penalaran logis
• Part 2: Theory contributing to practice
(chapters 4 – 10)
• Part 3: Accounting and research (chapters 11 –
14)

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Summary
• Accounting theory
• Major periods of accounting theory
development
• Normative accounting
• Positive accounting
• Conceptual framework
• IFRS

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Key terms and concepts
• Theory
• Accounting theory
• Normative theory
• Positive theory
• Behavioural theory
• Conceptual framework
• IFRS

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