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A Study of Accounting Theories

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Added on  2019-11-19

A Study of Accounting Theories

   Added on 2019-11-19

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Running head: A STUDY OF ACCOUNTING THEORIES A Study of Accounting TheoriesStudent’s Name:University Name:Author Note
A Study of Accounting Theories_1
1A STUDY OF ACCOUNTING THEORIESTable of ContentsQuestion 1..................................................................................................................................2Question 2..................................................................................................................................4Part a.......................................................................................................................................4Part b......................................................................................................................................4Part c.......................................................................................................................................5References..................................................................................................................................6
A Study of Accounting Theories_2
2A STUDY OF ACCOUNTING THEORIESQuestion 1Accounting theories lead to a clear conceptual idea as to how an accounting thought isdeveloped into an accounting practice and then it is in turn further developed into anaccounting principle. Accounting theories assess the global and ethical standards ofaccounting, their relevance linked to the political conditions of the location and the currentgovernment policies. The two of the more prevalent theories used for evaluating social andenvironmental accounting are legitimacy and stakeholder theory (as mentioned in thequestion).The word Legitimacy generally in accounting sense means a common or generalperspective concerned with the work done by a particular entity as to whether the work doneis according to the laid down norms and definitions and is done with proper tools ofaccounting (Lanis and Richardson 2012). Legitimacy theory essentially refers to themechanism that helps organizations in establishing and developing environmental and socialinitiatives on the part of the firm so that their social contract is fulfilled and in turn the goalsand objectives of the organization are ultimately met. The organization in order to support itsexistence needs legitimacy accounting so that the social and environmental actions done bythe entity do not hamper the environment or society. In legitimacy theory the idea of socialcontract is treated with utmost importance. Here in this theory society is treated as a realentity having real force and real desires or interests commonly termed as the public interest.Legitimacy theory is that accounting theory which inspires corporations to be socially andenvironmentally responsible (Fernando and Lawrence 2014). Its basic idea is that each andevery organization has some duty towards the environment and the society in which itoperates and draws its revenue from. Thus it gives stress on corporate social responsibility.The problem or one of the drawbacks for legitimacy theory in contributing to the general
A Study of Accounting Theories_3

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