a Define Accounting theory b What are the advantages and dis

(a) Define Accounting theory.

(b) What are the advantages and disadvantages of accounting theory? State how they affect accounting as it is today.

2.   What is a conceptual framework? Discuss its goals and objectives and how it is used in accounting.

3. The use of accounting information has improved because of the results of research in the area of accounting. Discuss the merits and demerits of the statement.

Solution

While accounting procedures are formula based in nature, accounting theory is more qualitative as it is a guide for effective accounting and financial reporting. The most important aspect of accounting theory is usefulness, which, in the corporate finance world, means that all financial statements should provide important information that can be used to make informed business decisions. This also means that accounting theory is intentionally flexible so that it can provide effective financial information, even when the legal environment changes.

Objectives and Goals of a conceptual framework for financial reporting include:

The biggest demerit has been with finer studies of the accounting information frauds and misstatements have increased and many organizations are able to cover their tracks and launder money and evade taxes.