Accounting Theory Basic Sciences & Applied Research

Question: Discuss about theAccounting Theoryfor Basic Sciences Applied Research. Answer: Introduction The research paper has critically reviewed and analysed the literature related to positive accounting after its development by Watts and Zimmerman in 1970s. The research paper has suggested some measures that can be undertaken for improving researches in the accounting settings. The research article revolves around the argument whether positive accounting theory is effective in attaining scientific objectives of accounting research. The argument has been analysed from various perspectives in the research article through the help of views and opinions of different authors. The research study attempts to explain the accounting method to be selected for carrying an accounting research for achieving its scientific objectives appropriately. The contribution of positive accounting theory in the field of accounting after its development has been analysed in detail in the report. The importance and deficiencies in positive accounting theory are identified and discussed in the overall researc h article. The main purpose of the research article is to propose some better theoretical models to be used in the field of accounting that can appropriately achieve its scientific objectives (Dunmore, 2009). In this context, the present essay aims to provide a critical analysis of the research article Half a Defence of Positive Accounting Research. The critical analysis of the article is done through summarising its main points, identifying the research question, discussing its theoretical framework, analysing the significance and limitations of the article. Summary of the Article The overall findings generated through the research article has been summarised in this section. It has been analysed through the critical analysis of the research article that positive accounting theory is regarded as one of the most influential theory in the field of accounting research. It has proved to be largely beneficial by the management of complex business organisations in selection of appropriate accounting choices for carrying out their daily business operations. The theory of positive accounting developed by Watts and Zimmerman is contradictory to that of normative accounting theory. The accountants initially use the concept of normative accounting theory before the development of positive accounting theoretical model. Normative accounting theory was mainly developed on the basis of accounting principles and as such is mainly theoretical based (Dunmore, 2009). On the contrary, positive accounting theory is developed on the basis of scientific phenomena and thus was believed to be largely effective for achieving accounting research objectives. The field of accounting is more practical based and has less reliance on theoretical concepts. Thus, positive accounting theory after is development was used largely by the researchers in comparison to normative accounting theory. However, the various deficiencies identified in the positive accounting theory have questioned its reliability on attaining scientific objectives of accounting research (Rhonheimer, 2000). Thus, various criticisms received by the positive accounting research have become the main reason for researchers to adopt better theoretical models. The author in the research article has proposed the use of better and improved theoretical models in comparison to that of positive accounting research for accounting settings. Thus, ontology and epistemology of positive accounting has been a nalysed and examined in detail in the research article (Dunmore, 2009). Research Question The research question as identified from the analysis of the article is What is the contribution of positive accounting theory in the field of accounting research.? In the context of this main research question, the article has also aimed to provide answer to the following sub-research questions: What is meant by the concept of incorporating positive approach in accounting settings? What is the importance and deficiencies of positive accounting theory in accounting settings? Does there is need of adopting better theoretical approaches in the field of accounting for achieving its scientific objectives? The research questions are identified by analysing and examining the literature review of the research article. All the questions are based on the overall discussion held in the literature review section. The literature review analyses the concept of positive accounting research through examining its importance and deficiencies from the views and opinions of different authors. Thus, all these questions have merged from the theoretical framework of the overall literature review of the research article (Dunmore, 2009). Theoretical Framework The theoretical framework of the research article is based on the approach of positive accounting used by the researchers for carrying accounting researches. It has been analysed from the views and opinions of different authors discussed in the theoretical framework section that positive accounting theory is not so effective in accounting settings. Watts and Zimmerman have proposed that positive accounting theory is based on scientific phenomena and as such is largely useful for testing accounting predictions. However, there has been various criticism received against the theory as to be more rhetorical than practical based (Dunmore, 2009). The researchers have claimed that positive accounting theory is not so effective in testing practical accounting predictions. The author in the overall literature review section has emphasised that positive accounting theory needs modifications in order to be successful in imitating natural science (Porta and Keating, 2008). The various authors in the theoretical framework of the resrch article have regarded the contribution of the theory in accounting to be negligible and thus it has not attained a legitimate place in accounting. The theory of positive accounting is limited only to study accounting practices but its practical implementation has not been successful (Chatfield and Vangermeersch, 2014). As depicted from the theoretical framework of the research article, positive accounting theory is based on value judgement and thus cannot be stated to be based on scientific based. The theory of positive accounting provides value judgment to the managers for selecting appropriate accounting method for maximising business performance. Thus, it is regarded as more of theoretical based and less practical oriented (Deegan, 2014). The reliability of positive accounting research is also questioned on the basis of appropriateness of natural sciences for studying the concept of social phenomena. Some authors regarded this as appropriate while some are against this argument (Ghnabari et al., 2016). In this context, Popper has stated that all scientific theories have evolved over a period of time through accumulation of either qualitative or quantitative data. The methodology of development of a scientific theory a proposed by popper can be divided into four steps. The first step involves obs erving carefully and developing preliminary ideas. The next step is to develop a theory on the basis of the empirical evidences. The theory developed should be developed on predictions that can be tested and as such should be quantitative predictions. This is followed by testing the predictions of the new theory developed with those of previous theories for accepting or rejecting the particular theory developed. Thus, Popper has claimed that this form the basis of accepting or rejecting a particular theory. Large number of theories is disapproved on the process and only small number of theories proves to be effective in meeting all these requirements (Dunmore, 2009). This clearly states that positive accounting theory needs to be tested on all the above parameters before its acceptance in accounting settings. This approach used by Popper is regarded as falsification criterion on the basis of which theories are regarded a true or false. Popper has regarded positive accounting theory to be not scientifically based as it is not based on quantitative testable predictions. The theoretical framework has also suggested analytical modelling for making a successful positive research program. This involves collection and testing of data before developing a theoretical model (Dunmore, 2009). Positive accounting theory is used by management for selecting an accounting method to be used for maximising a firm performance. As such, it is largely essential that it should be more practical based in comparison to having a rhetorical approach. This can be done by measuring and testing accounting predictions before selecting an accounting method. Thus, positive acco unting theory need to be improved so that it involves testing accounting predictions and provides an appropriate selection of accounting method for the management (Bazrafshan and Talebina, 2016). Significance and Limitations of the Article The research article is highly significant as it helped in developing the deficiencies in positive accounting approach that needs to be improved. It has provided an in-depth understanding about the concept of positive approach in accounting and the need of better theoretical models to be used in accounting. The research article will prove to be largely useful for the future researchers to examine and evaluate the appropriateness of positive accounting theory to be used in accounting settings. It will form a base for the future researchers to find empirical evidences against positive accounting theory and thus selection of more appropriate theoretical model to be used in accounting research. However, there are several limitations of the research article as analysed during its critical analysis. The major limitation of the research article is that its literature is limited and does not provide detailed understanding about the various aspects of positive accounting research (Dunmore, 20 09). The theoretical framework of the research article is wide but is not synchronised in a proper way. It does not give a proper understanding of the main problems in the concept of positive approach in accounting to the readers. Thus, the literature review section of the research article lacks a detailed analysis that would have been useful for the readers to understand the research topic in a proper way. Also, the research study is mainly subjective in nature and does not have any objectivity. This is due to collection and analysis of only secondary data in the research study through the help of literary sources. There is no practical evidence that presents the accounting problems encountered through the use of positive accounting approach (Dunmore, 2009). The research study is s mainly qualitative and does not undertake any type of quantitative analysis for carrying out the research study. The quantitative analysis can be done through collecting primary data for providing practical evidence in relation to the research topic. This will enhance the credibility and reliability of the research study in the mind of future researchers. However, the research work is mainly based on the views and opinions of other authors and thus lacks reliance. This limits the usefulness of the present research work for future researches that will be conducted in this context. The presence of practical evidence for supporting theoretical findings is necessary for maintaining the credibility of the research work. Thus, it will prove to be a major limitation of the research article impacting its significance for the future researches (Dunmore, 2009). Conclusion The author through the research article has proposed the adoption of a combination of various accounting methods for the purpose of accounting research. This is mainly due to several deficiencies in the theory of positive accounting as discussed in the overall research article. The weaknesses of positive accounting theory need to be improved so that it proves to be effective in accounting research for achieving its objectives. The outcomes achieved through positive accounting theory implementation should be more scientifically based as recommended by the author in the research article. The overall critical analyses of the research article have helped in developing an understanding of the concept of positive accounting approach. The contribution and limitations of the theory are analysed for developing an understanding of the positive accounting theory. The critical analysis will help in understanding the difference between scientific and societal theory. This will help in selection o f the most appropriate theory as per the situation given. Also, the critical analysis has also helped in gaining knowledge of various theoretical models that are used in accounting settings. The detailed understanding of positive accounting theory will prove to be largely beneficial in understanding various concepts in accounting field. References Bazrafshan, M. and Talebina, G. 2016. Challenges Positive Accounting Theory. International Journal of Basic Sciences Applied Research 5 (2), pp. 119-122. Chatfield, M. and Vangermeersch, R. 2014. The History of Accounting (RLE Accounting): An International Encylopedia. Routledge. Deegan, C. 2014. Financial Accounting Theory. McGraw-Hill Education Australia. Dunmore, P.V. 2009. Half a Defence of Positive Accounting Research. Ghnabari, M. et al. 2016. PAT (Positive Accounting Theory) and Natural Science. International Research Journal of Applied and Basic Sciences 10(2), pp. 177-182. Porta, D.D. and Keating, M. 2008. Approaches and Methodologies in the Social Sciences: A Pluralist Perspective. Cambridge University Press. Rhonheimer, M. 2000. Natural Law and Practical Reason: A Thomist View of Moral Autonomy. Fordham Univ Press.