Contemporary Accounting Theory

This paper discusses Kuhn's explanation about the scientific revolutions and paradigm and Chambers' CoCoA theory that challenged the conventional accounting practices and provided an alternative market-based system that is relevant to the decision-making process and user's evaluation in accounting. It also provides a critical appreciation of Chambers' contributions and discusses the critics and acceptance of Chambers in the era of reforms in accounting and in his contemporary period in relation to the changes that have transpired in the accounting world to date.

Running Head: CONTEMPORARY ACCOUNTING THEORY
Contemporary Accounting Theory
Name
Affiliation

CONTEMPORARY ACCOUNTING THEORY 1
Contemporary Accounting Theory
Executive summary
In accounting history, there have been a number of influential authors and theorists;
Thomas Kuhn and Professor Ray J Chambers being one of them. The contributions made by the
two latter individuals have hugely transformed the world of accounting in numerous ways.
Therefore, this paper discusses Kuhn's explanation about the scientific revolutions and paradigm.
It also explains the revolutionary contributions of Professor Ray J Chambers in accounting
specifically in the normative and positive accounting eras. Additionally, the paper critically
appreciates the critics and acceptance of Chambers in the era of reforms in accounting and in his
contemporary period in relation to the changes that have transpired in the accounting world to
date.
Introduction
Before the contributions of Thomas Samuel Khun and Professor Ray J Chambers, there
was difficulty in understanding the theoretical and conceptual aspects of accounting. Thomas
Samuel Khun's efforts explained the concept of scientific change in accounting using a
theoretical perspective. From Kuhn's point of view, the paradigm is not only a current theory but
also an entire worldview with all the implications associated with it. Scientific progress is
initiated by the success of one scientific effort creating a way to a contradictory and different
relatively successful scientific effort. This changed the ways in which accounting product and
idea development are looked at both in history and the current situations.

CONTEMPORARY ACCOUNTING THEORY 2
Review of literature to discuss Kuhn` explanation on paradigm and science revolutions
Paradigms are not just about facts. It entails the ways through which different people look
at the world Kuhn (1962). If paradigm was not in existence, scientists would not be aware of the
exact facts to collect, how to gather them, and what to use them for after gathering them.
Additionally, all facts that may be related to a particular phenomenon may appear equally
relevant (Alexander,2019). However, with the presence of a paradigm, scientists can collect and
organize facts as suggested by paradigm. After some time, this process is hiked into a different
position. When some genius develops a new paradigm, the process starts again. In a paradigm,
numerous facts are accumulated of which the majority of them survive in a single paradigm after
a slight effort of translation is applied (Kivunja & Kuyini, 2017; Schiller,2015). Basically,
scientific progress is a story comprising of scientists continuously tossing out each other's work
and starting a new one. In his words, Kuhn explains that "Normal science consists in the
actualization of that promise an actualization achieved by extending the knowledge of those
facts that the paradigm displays as particularly revealing, by increasing the extent of the
match between those facts and the paradigm’s predictions, and by further articulation of the
paradigm itself”. An extensive understanding of normal science requires one to put into
consideration non-normal science (Alexander, 2019). Basing on the way the key ideas presented
by Kuhn are intricately interwoven, there is still confusion about how scientific revolutions up to
date (Kaiser,2012).
Gathering of facts is, in most cases, limited to the ones accessible to experimentation and
nearly random even though the gathering of facts still occurs. Scientists usually disagree about
their field's fundamentals and more often carry out debates on various worth pursuing problems,

CONTEMPORARY ACCOUNTING THEORY 3
the means through which they can pursue them and the standards of evaluating solutions
(Naughton,2012). As a result, competing schools with a different phenomenon cluster under
investigation are created. However, scientists do not need to examine the first principles again
and debate about their fundamentals with the existence of paradigm. Rather, theory articulation
and fact-gathering become very directed (Davies, 2013).
Orman (2016) explains that Kuhn's thought about scientific revolutions and the shift in
paradigm seems to be problematic. However, the revolutionary effect of Kuhn, specifically in the
sociology of science was to dethrone logical empiricism and throne historical approach. Kuhn
explains that a scientific revolution takes place when scientists experience anomalies which
cannot be explained by paradigm (Cohen, 2015). In normal science, there are puzzles simply
because there exists no paradigm that provides a basis for research to resolve all the problems
Bird, 2012). "Paradigms provide all phenomena except anomalies with a theory-determined
place in the scientist’s field of vision" Kuhn (1962). Therefore, the occurrence of anomalies is
inevitable since it is difficult to fit a paradigm with nature. However, it is very important to recall
that experiencing unanticipated novelty by researchers is only dependent on the extent to which
their anticipations about their instruments and nature prove wrong (Abbott, 2016). The paradigm
defines these anticipations. Eventually, a sense of crisis will be created by the accumulation of
anomalies. More so, faith is lost in the ability of paradigm to solve the problems in the science
field and the rules governing normal science are also broken down (Pires,2012).
Scientific revolutions are characterized by incommensurability. The new scientific
paradigms succeeding and preceding a paradigm shift differ, making their theories
incommensurable. Kuhn explains that the scientific revolution is a result of science itself being

CONTEMPORARY ACCOUNTING THEORY 4
transformed. However, the transformation also exists in the world in which scientists operate.
This takes place because of the transformation that occurs in scientific imagination; hence,
scientists responding to the world differently (The Convesation, 2012).
Discussion of Chambers’ revolutionary contributions
Professor Ray J Chambers is one of the most famously known influential theorist and
recognized scholar who is internationally known for his contributions towards the study of the
accounting thought history. Chambers is also known for his countless efforts towards supporting
and assisting students and his colleagues and encouraging writers and young academics to
deliver high-quality research. In the 1960s, Chambers proposed continuously contemporary
accounting(CoCoA), a market-based system that was considered as an alternative to the
historically known cost accounting and conventional method. At first, the acronym of the theory
was COCOA which was later changed to CoCoA in 1976 (Paul, 2015). Defining the real
problem, discovering its actual causes and making attempts to develop an appropriate solution
was the approach of Chambers towards theory investigation. He continuously challenged the
theoretical propositions which existed by then believing that they were only current practice
rationales. Chambers asserts that the absence of well-developed accounting theory with strict
rules with which all accountants are supposed to adhere to lead to irrelevant and contradictory
accounting practices. In his CoCoA theory, Chambers demonstrated with evidence and logic that
the only accounting system relevant to the decision making the process and user's evaluation in
accounting is the one based on marketing selling prices. One of the unique features of CoCoA is
its approach to the measurement of assets. In accounting, measurement is one of the essential and
major tasks that is considered as a foundation for the development of any accounting theory.

CONTEMPORARY ACCOUNTING THEORY 5
Most of the imperfections in accounting practices are caused by the application of unfitting
measurement approaches (Persson, 2013). His methodological and epistemic concerns, as well as
his extraordinary efforts in dealing with measurement accounting issues, took the most critical
and major components of Ray J Chambers` work (Persson, 2013).
One of the notable things in the CoCoA theory is the vital distinction made between
valuation and measurement. Valuation is mainly concerned with the projection of future benefits
while measurement entails relating facts by accountants and communicating them to others.
Despite the fact that different accountants can equally measure a certain asset, it can as well be
differently measured by two different accountants depending on their perceptions. Through
exploring measurement literature in the 1960s, Chambers addressed accurate measurement
specifically in physical sciences where he came up with a conclusion that attaining accurate
measurement needs observation of terminal object state and its initial state, and putting into
consideration any variations that may occur during that particular period (Dean, 2019)
Chambers` extensive research and rigorous understanding of the limitations of the
existing practices and discovery of the underlying factors behind such shortcomings represented
a vital phase in the development of his theory. Basing on his academic and personal experiences,
Chambers criticized conventional accounting after detecting anomalies in these accounting
practices. His experiences suggested that accounting function was not meant to serve its users as
perceived by other researchers. Chambers also explains that the information provided by
accountants does not fulfill the accounting function. Accountants used to operate based on their
pre-scribed procedures and provided information to users whether relevant to the decision-
making process and user's evaluation or not, yet users expected specific relevant information. He

CONTEMPORARY ACCOUNTING THEORY 6
explains that average users can not completely understand actual income differences that call for
the application of various accounting methods. Chambers described conventional accounting as
"higgled-piggledy" accounting since its practices combined past, present, and future results
unjustifiably hence causing inconsistency.
Additionally, Chambers also argued that some financial information presented by
accountants on numerous occasions was not only misleading but also irrelevant (Politi,2018).
With such a phenomenon, the capital markets that comprised of participants with limited
knowledge were greatly impacted. Due to the insignificance of conventional accounting
practices, Chambers was forced to investigate accounting literature. He challenged and critiqued
the already existing theoretical accounting propositions for been poorly established. Chamber's
point of view is that these propositions lacked the qualities of being considered theories. The
majority of them were developed basing on a set of conflicting assumptions and were mainly
justifying and rationalizing current practices. As a result, Chambers obtained a foundation on
which he continuously attacked the application and legitimacy of the misleading practices. The
rising complexity in accounting, as well as the increasing differences in the accounting
acceptable methods, is explained by the fact that current accounting practices did not follow the
theoretically recognizable bases. It is also vital to note that Chambers did not deny the
importance of other valuation methods in accounting. His only concern was the fact that the
adaptive capacity of a firm to a new environment was not indicated in its financial statements
besides when net realizable and contemporary values were used (Kaya,2017).
Critical appreciation of Chambers' contributions

CONTEMPORARY ACCOUNTING THEORY 7
Professor Ray J Chambers is one of the worldly recognized accounting academics who is
up to date remembered for his contributions towards the accounting department. Chambers was
an intellectual giant, prolific author, rigorous theorist, and accounting pioneer whose impact on
the accounting sector is up to date felt around the world (Unegbu, 2014). He received several
honorary doctorates and accolades and was the first non-United States academic to be inducted
into U.S Accounting Hall of Fame. Several organizations appreciated Chambers' works by
awarding him. He won the AICPA's gold medal for his magnificent contribution towards
accounting literature, Economic Behavior, and Evaluation (Unegbu, 2014).
Some of the researchers accepted and appreciated Chambers for his confidence while
explaining the validity of his arguments. While others greatly appreciated his persistence and
determination that caused an aggressive debate about accounting practices. Despite the fact that
the majority of the users appreciated his arguments, other individuals specifically his opponents
greatly criticized his arguments and became strongly annoyed hence resulting in personality
conflicts. Although other personalities criticized chambers in the accounting field, he stuck to his
goal of developing a theory of his own after explaining to the world the science behind the
construction of theories basing on his exploration of various knowledge fields (Piketty,2014).
Simplicity, clarity, and effective communication are some of the things appreciated in
Chambers` works. He campaigned for a straightforward applicable accounting system that called
for distributing a simple and clear message to make communication easy. This is evident with his
last publication of "The Case for Simplicity in Accounting” Chambers has been accepted for his
role towards increasing the effectiveness of communication in accounting. He directly observed
the numerous unsound practices that had previously been hindering effective communication in

CONTEMPORARY ACCOUNTING THEORY 8
accounting. The application of supplementary statements would reduce the reported
information's creditability and confuse users (Piketty, 2014).
Although the CoCoA theory was greatly appreciated and accepted by different people
around the world, other individuals continuously criticized it. Among the major critics was that
the theory was inconsistent since it ignored balance sheets and the issue of fewer market prices.
More so, the theory contradicted with the going concern assumption and allowed various
differing valuation measures. With the presence of such assumptions, critics claimed that
Chambers` accounting system was developed based on liquidation value orientation. This could
result in the undervaluing of the firm, considering it as an entity whose parts are lower than its
sum value. However, Chambers claimed that there was a world-wide misunderstanding of the
going concern assumption (Unegbu, 2014).
Up to date, the application of the CoCoA theory in the absence of market selling prices is
another criticism area. Chambers tried to demonstrate how discoverable market prices for the
majority of the assets are. He argued that different firms have often succeeded in discovering the
prices of their assets, especially when they persist even though this activity seems to be
challenging for some firms. This is very true since numerous firms up to date find it difficult to
quickly obtain market prices even with the presence of high advancements in information
technology. Although Chambers attempted to thoroughly present the case of the balance sheet on
the left side, critics still rise on the fewer justifications and attention given to the right-side.
Critics claim that there exists a possibility of inconsistency in the treatment of liabilities by
Chambers. Other critics directly accused Chambers of lacking factual support and being
normative (Davies, 2013).

CONTEMPORARY ACCOUNTING THEORY 9
However, Chambers argued that his theory was developed based on real-world behavior
observations and was purposely developed to provide solutions for daily problems. Although
policymakers did not offer the CocoA theory official support, it does not mean that the theory is
irrelevant or logically invalid. Some analysists transfer the rejection of the CoCoA theory to
political, sociological, behavioral, and philosophical factors. Chambers demonstrated the
connection between corporate failure and financial distress cases with insufficient financial
reports and accounting practices that mislead users. Currently, the CoCoA theory's future is
unsettled. It is still maintained that the arguments presented by Chambers on CoCoA are
considered to be logically superior as compared to other alternative methods. However, there is a
need to increase awareness of Chambers` works as technology advances so as to develop the
information base from which valid, relevant information is made available to the world
(Kaiser,2012).
Conclusion
One of the factors that determine the worth of a theory is the number of critics it draws.
Considering the fair share of critics CocoA drew, it is a worth theory having notable facts and
deserves respect. Basing on the arguments and their validity as explained by Chambers, we think
Chambers should be globally recognized both for his contributions towards the accounting
thought and his significant contributions to the history of accounting. There are several things we
have learned from this assignment, including the importance of confidence in the presentation of
facts as long as there is valid and empirical evidence that supports the arguments being
presented.

CONTEMPORARY ACCOUNTING THEORY 10
References
Abbott, A. (2016). “Structure as Cited, Structure as Read.” In Kuhn’s Structure of Scientific
Revolutions at Fifty: Reflections on a Science Classic. Chicago: University of Chicago
Press, 2016. DOI: 10.7208/chicago/9780226317175.001.0001
Alexander, S. (2019). Book Review: The Structure Of Scientific Revolutions. Retrieved from
https://www.lesswrong.com/posts/HcjL8ydHxPezj6wrt/book-review-the-structure- of-
scientific-revolutions
Bird, A. (2012). "The Structure of Scientific Revolutions" and its Significance: An Essay Review
of the Fiftieth Anniversary Edition. The British Journal for the Philosophy of Science
Cohen, M. (2015). Paradigm Shift: How Expert Opinions Keep Changing on Life, the Universe,
and Everything. Imprint Academic. p. 181.
Davies, A. (2013). Kuhn on incommensurability and theory choice. Studies in History and
Philosophy of Science, 44, 571–579.
Dean, G.(2019). Accounting Thought and Practice Reforms: Ray Chambers’ Odyssey. Retrieved
from https://arc.eaa-online.org/blog/accounting-thought-and-practice-reforms-ray-
chambers%E2%80%99-odyssey
Kaiser, D. (2012). "In retrospect: the structure of scientific revolutions." Nature. 484: 164–166.
Kaya, I. (2017). Accounting Choices in Corporate Financial Reporting: A Literature Review of
Positive Accounting Theory. Retrieved from https://api.intechopen.com/chapter/pdf-
preview/55626

CONTEMPORARY ACCOUNTING THEORY 11
Kivunja, C & Kuyini, A.B.(2017). Understanding and Applying Research Paradigms in
Educational Contexts. International Journal of Higher Education.
Kuhn, T. (1962). The Structure of Scientific Revolutions (2nd ed.). Chicago: University of
Chicago Press.
Naughton, J. (2012), "Thomas Kuhn: the man who changed the way the world looked at the
science," The Guardian. Retrieved from
https://www.theguardian.com/science/2012/aug/19/thomas-kuhn-structure-scientific-
revolutions
Orman, T. F. (2016). “Paradigm” as a Central Concept in Thomas Kuhn’s Thought. International
Journal of Humanities and Social Science. Vol.6, No.10
Paul, H. (2015). Kuhn's Development Before and After Structure. Boston Studies in the
Philosophy and History of Science. 311. Springer International Publishing. Pp. 185–195.
doi:10.1007/978-3-319-13383-6_13. ISBN 978-3-319-13382-9.
Persson, M.E.(2013). The Rise and Fall of Comprehensive Accounting Theories: R. J. Chambers
and Continuously Contemporary Accounting. SSRN Electronic Journal.
Piketty, T. (2014). CAPITAL IN THE TWENTY-FIRST CENTURY. Retrieved from
https://dowbor.org/blog/wp-content/uploads/2014/06/14Thomas-Piketty.pdf
Pires, F. O. (2012). Thomas Kuhn's 'Structure of Scientific Revolutions' applied to exercise
science paradigm shifts: Example including the Central Governor Model. British Journal
of Sports Medicine.

CONTEMPORARY ACCOUNTING THEORY 12
Politi, V. (2018). Scientific revolutions, specialization and the discovery of the structure of DNA:
toward a new picture of the development of the sciences. Retrieved from
https://link.springer.com/article/10.1007/s11229-017-1339-6
Schiller, C. (2015). Mark Zuckerberg’s year of books – Thomas Kuhn's 'the structure of scientific
revolutions' review. Retrieved from https://thenextweb.com/insider/2015/04/03/mark-
zuckerbergs-year-of-books-thomas-kuhns-the-structure-of-scientific-revolutions/
The Convesation. (2012). Thomas Kuhn’s The Structure of Scientific Revolutions: 50 years on.
Retrieved from http://theconversation.com/thomas-kuhns-the-structure-of-scientific-
revolutions-50-years-on-6586
Unegbu, A. O. (2014). Theories of Accounting: Evolution & Developments, Income
Determination, and Diversities in Use. Research Journal of Financing and Accounting.