The summary summarizes various approach to the accounting theories which was proposed by different authors. Some authors were endeavored to integrate the economic theory with the accounting theory, so that the concepts of economics can be applied in the accounts as well. The authors have argued for the primacy of new approaches. They endeavored to adapt the economics model into the world of accountants. Authors such as Gilman seeks to rationalize diverse practices. The neo classical economic theory which ignores the historical costs has been incorporated with the accounting theory. Some of the writer who were mainly economists such as Canning and Alexander relied on true income theory which argued that the recording of data should be done at current values rather than following a system of historical record keeping and used the various economics terms in the accounting context. Other writer such as Paton, wanted to drew a clear cut distinction between realized and unrealized income. He said that estimated gross margin value cannot be reliable and it should not be recognized until the actual sales value is derived (Rutherford 2013). Canning applied the opportunity costs analysis theory of economics into accounts and proposed a method of assessing the asset value at current cost by indirect valuation. Another author such as MacNeal, Moonitz, Bell was of the view that the historical recording keeping of the assets should only be done when it is not possible to assess the acceptable market selling prices and viewed accounting as a succession of balance sheet rather than income statement. So , the common recommendation made by the authors was that the economic decision making should be done at current price information.
Some other authors such as Hatfield and Gilman were of the opposite view and made recommendation on the inconsistencies in the financial statements. They considered current prices as irrelevant to the transactions and are not verifiable . this would lead to disturbance in the homogeneity of financial statements contents (Beattie 2014). Littleton has proposed an accounting Darwinism which views that accounting is continuing an evolution. On the other hand, Ijiri who is another theorist did reverse inductive analysis and defended historical costs on the ground of current costs. The measures which are unambiguous is viewed as the sine qua non of accountability.
The attempts by these authors attempts to formulate the implicit accounting models for the purpose of global application and to make the alteration in the feasible area. In an inductive study , in order to develop the hierarchy of generalizations , principles and postulates can be adopted as framework.
Beattie, V., 2014. Accounting narratives and the narrative turn in accounting research: Issues, theory, methodology, methods and a research framework.The British Accounting Review, 46(2), pp.111-134.
Rutherford, B.A., 2013. A pragmatist defence of classical financial accounting research. Abacus, 49(2), pp.197-218.