Chapter 1 Slides

Question 1

Why is theory important

Answer 1

Understand the world we live in
Provide a basis for decision making
To provide an explanation
Help predict the outcome or future

Question 2

Definition of Theory

Answer 2

belief that guides actions or an idea that explains something

Question 3

Definition of Accounting Theory

Answer 3

Description, explanation or prediction based on observations and/or logical reasoning

Question 4

Purpose of logical reasoning in accounting

Answer 4

Provide a general framework of reference by which accounting practices can be evaluated
Guide the development of new practises and procedures

Question 5

Types of accounting theories

Answer 5

Normative

Positive

Question 6

Positive Theories

Answer 6

About the world in the present
Describe what is happening
Explain what is happening
Make predictions about what will happen

Question 7

Normative Theories

Answer 7

Make predictions about what should happen
Makes predictions on how it should be (what the goal should be)
Backed by observations or facts

Question 8

What makes a theory good

Answer 8

It’s logical in its construction
Clearly articulated
Be testable
Be consistent with observations

Question 9

Types of research

Answer 9

Observational
Experimental 
Quantitive 
Qualitative
Exploratory 
Theoretical