[ACC120] - Final Exam Guide - Everything you need to know! (30 pages long)
Document Summary
A coherent set of hypothetical, conceptual & pragmatic principles forming the general framework of reference for a field of inquiry : more simply: a set of ideas used to explain/understand real world observations. Accounting theory is used to explain, predict and prescribe accounting practice and reactions to accounting regulations and practices. Financial accounting theory explains when financial accounting information will be decision-useful. I. e. it explains how, when and why information asymmetry is minimised in financial decision. Important to understand that accounting information impacts capital markets and the efficient allocation of resources. Accounting matters it is not just debit and credits: we can discuss accounting based issues within a framework. 1800 1929 adhoc development of accounting principles. 1930 1970s adhoc and regulatory based development of accounting principles and rules (1929) Regulation as a response to economic crises, especially stock-market crash. Great depression reinforced focus on historic cost accounting: In general accounting practice (and theory) had an income statement focus (matching principal)
