Accounting Theory: Deontology, Teleology, and Ethical Theories

This article discusses deontology, teleology, and ethical theories in accounting. It also covers the major historical events in accounting from 1900 to 2018 and their impact on society.

Running head: ACCOUNTING THEORY
Accounting Theory
Name of the Student
Name of the University
Author’s Note

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Table of Contents
Question 1........................................................................................................................................2
Requirement [a]...........................................................................................................................2
Requirement [b]...........................................................................................................................2
Requirement [c]...........................................................................................................................3
Requirement [d]...........................................................................................................................3
Requirement [e]...........................................................................................................................4
Question 2........................................................................................................................................4
Requirement [a]...........................................................................................................................4
Requirement [b]...........................................................................................................................5
Requirement [c]...........................................................................................................................5
Requirement [d]...........................................................................................................................6
References.......................................................................................................................................7

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Question 1
Requirement [a]
Deontology can be regarded as an ethical theory or perspective and it is based on
obligation or duty. More specifically, a deontological theory refers to a theory where the moral
obligations of duties are considered as self-evident including intrinsic value and there is not any
need to provide justification. As per this theory, the evaluation of the moral actions is done
based on inherent wrongness or rightness rather than the primary consideration of
consequences and goodness (Ismail, 2014).
On the other hand, teleology provides description about an ethical perspective of any
situation contending the wrongness or rightness of any actions solely based on the badness or
goodness of their consequences. Under the strict teleological interpretation, neutrality in the
actions can be seen when they are considered apart from their consequences. Some of the
major examples of teleological theories are ethical egoism and utilitarianism (Berker, 2013).
Requirement [b]
One major example of normative theory is the ethical egoism theory. This particular
theory favors, recommends and praises specific kinds of actions or motivations; and it also
involves in describing another types of motivation. Two major versions of their theory can be
seen; they are individual ethical egoism and universal ethical egoism. As per individual ethical
egoism, one should look out for his/her own interest. As per universal ethical egoism, people
should concern about the others when they have their interest involved with that (Vardaman,
Gondo & Allen, 2014).
From the perspective of the above-discussed ethical egoism theory, the appropriate
course of action for Penny would be to comply with the instruction of Anne Redmond that is
not to write down the stock in the year end account. This decision would be appropriate for
Penny as this decision would fulfill her own interest. There will be an increase in the payment of
Penny in case Anne can set the deal with the potential buyer. This situation clearly shows the

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involvement of Penny’s own interest with the case. Thus, this course of action is justified for
Penny from ethical egoist perspective (Gantt & Burton, 2013).
Requirement [c]
Utilitarianism is a major ethical theory that involves in the determination of right from
the wrong by focusing on the outcome; thus, it can be regarded as a form of consequentialism.
According to this theory, most of the ethical choices are one that can do greatest good for the
greatest number. Wide use of this theory can be seen in the businesses all over the world due
to the presence of the costs and benefits (Mill, 2016).
The provided situation can be analyzed in the light of the theory. While applying the
concept of this theory, the earlier course of action of Penny would not be justified in this
situation as it would involve in the satisfaction of own interest rather than the greatest good of
all. The manipulation in the inventory account may not affect the company in the short-run,
but one cannot ignore the possibility that this decision can affect the financial position of the
company in long-run in case the auditors disclose it. For this reason, as per utilitarianism
theory, the correct course of action would be to write down the inventory that has been in the
stock for two years as it will do the greatest good for the whole company (Mulgan, 2014).
Requirement [d]
Deontology is regarded as another major part of ethics focusing on the wrongness or
rightness of the actions; and it is opposite of the rightness or wrongness of the consequences of
those actions. For this reason, a deontologist will determine a situation good or bad based on
the fact that whether it brings right or wrong. Thus, in this theory, the priority of right can be
seen over good (Paquette, Sommerfeldt & Kent, 2015).
The provided situation can be explained with the help of this concept. As per the
deontology theory, the right course of action for Penny would be to write down the two year
old inventory in the current year as this is the right action. It can be considered as right because
this action of writing down the inventory is as per the accounting principles that the companies
are required to be complied with. At the same time, not writing down the inventory may be

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good for the employees and Penny, but it is not right as per the accounting principle as it is
against the ethical as well as accounting principles (Sharma & Lijuan, 2014).
Requirement [e]
The above discussions talks about three ethical theories that can be connected with the
correct course of action of Penny. At the time to make any business decisions, the decision-
maker is needed to take into consideration the interest of all the stakeholders in the company
instead of only himself/herself. The egoism theory takes into account the interest of only Penny
and some employees. Utilitarianism focuses on the consequence that can be good or bad.
However, the deontology theory takes into account the right decision that is good for all the
members of the company and the company itself. Under this perceptive, it is needed for the
decision-makers to make decisions as complying with all the required principles and
regulations. Moreover, the right decisions are goods for the long-run of the companies as it
ensures the sustainability of the organizations. For this reason, the deontological ethical theory
leads to the appropriate course of action for Penny in the provided situation (Sharma & Lijuan,
2014).
Question 2
Requirement [a]
The occurrence of many key historical events can be seen in the history of accounting
from the year of 1900 to 2018. At the beginning of 1900 that is the end of the industrial
revolution, the development in the double entry system of accounting can be seen. At the same
time, the development of different kinds of measures and techniques can be seen for the
reduction in fraud and scandals in the accounting process. After some years, the development
of United States Generally Accepted Accounting Principles (GAAP) took place by the American
Institute of Certified Public Accountants (AICPA). The establishment of Financial Accounting
Standard Board (FASB) can be seen in the year of 1939 (Zhang & Andrew, 2014).
After this time, FASB and AICPA has been working together with the Securities Exchange
Commission (SEC) for the development of different kinds of accounting standards for the

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businesses so that the accounting works can be carried out in the correct manner. After that, in
the year 2001, the development of International Financial Reporting Standards (IFRS) can be
seen. The main objective behind the development of IFRS is to introduce one uniform
accounting standard for all the countries (Wehrfritz & Haller, 2014). Thus, from the above
discussion, it can be seen that there has been some major events from 1900 to 2018 that helps
in shaping the accounting profession.
Requirement [b]
The above discussion indicates towards the occurrence of some of the major events in
the accounting profession. In this context, it needs to be mentioned that the accounting
profession is considered as a major part of the society. From the example from the above
events, it can be seen that that the emergence of accounting is from the society. The main aim
of the development of all these events is to bring improvements in the accounting processes so
that the companies can take into consideration all the economic consequences (Walker, 2016).
At the time to conduct the business operations, it is needed for business organizations to
comply with all the accounting rules and regulations. At the same time, the business
organizations have certain responsibilities towards the betterment of the societies as they
operate in the society. The introduction of GAAP, FASB and IFRS has major positive effects on
the organizations as the companies can continue their accounting and financial operations in
the most proper manner. In case the companies run their business operations in the right
manner, it ensures the effective profitability of the companies. When a company is profitable
enough, they can contribute towards the betterment of the society (Walker, 2016). Thus, on
the basis of the above discussion, it can be seen that the major events in the accounting
support the fact that accounting is socially constructed.
Requirement [c]
Accounting can be considered as the process to collect, analyze and communicate the
economic information of the companies. However, for the development of the broader
understanding about the processes of accounting as well as its central role in the society, it is
needed to consider the social perspective. People in the society exist with the establishment of

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relationship with each other. At the same time, another way to view the society is to segment
them in different areas; like social, economic, political and organizational areas. For the purpose
of effective functioning, there is a need to establish communication among these different
areas; it is the accounting information that assists in establishing this communication.
Accounting information serves in different purposes like to help the users in decision-making,
allocation of scare resources and others (Schaltegger & Burritt, 2017).
For this reason, it can be seen that there is a major influence of the accounting
information on the society and this aspect affects everybody. In this case, the case of National
Cole Board can be presented as example. In this organization, the company used the
measurement of accounting profit for the justification of closure of coal pits, impact in the
electivity prices, taxes, jobs and others. Thus, from the above discussion, it can be observed
that the accounting process and accenting information has many positive contributions towards
the development of the societies and it can be found from the example also. Hence, based on
the above whole discussion, it can be said that accounting can influence society (Miller &
Power, 2013).
Requirement [d]
The above discussion analyze the facts that the accounting has influence on the society
and they are socially constructed. It can be seen that all the developments in the accounting
system brought while considering their impact on the society. At the same time, it can also be
seen that that the accounting information helps in the establishment of effective
communication among all the segments of the societies. Apart from this, the accounting
information also helps in accounting decision-making as well as the effective allocation of the
resources of the companies. Hence, it can be observed from both the perspectives that the
accounting information as well as accounting process has large contribution towards the
society. All these aspects provide justification for supporting both the aspects (Alewine & Stone,
2013).

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References
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Berker, S. (2013). Epistemic teleology and the separateness of propositions. Philosophical
Review, 122(3), 337-393.
Gantt, E. E., & Burton, J. (2013). Egoism, altruism, and the ethical foundations of
personhood. Journal of Humanistic Psychology, 53(4), 438-460.
Ismail, S. (2014). Effect of ethical ideologies on ethical judgment of future accountants:
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