Understanding of accounting theory

understanding Theory

Before discussing accounting theory we can understand the structure of words. The theory is the arrangement of the guidelines, concepts, definitions, and serving in a systematic phenomenon by showing the relationship between the variables with one another in order to explain and predict phenomena.

Webster's Third New International Dictionary defines a theory as to the arrangement of interrelated hypotheses, concepts, and principles that form the pragmatic frame of reference for the field in question.

McDonald gave the three elements of the theory, namely:

1. Make the code as a symbol of the phenomenon

2. Combine them in accordance with the regulations

3. Translate into a phenomenon

Kenneth S. Most (1982) defines theory as "a systematic statement of the rules or principles underlying or guiding a set of phenomena." Theory can be considered as a framework or arrangement of ideas, explanations of phenomena, and prediction of the future behavior. A theory is a systematic and scientific explanation. Kenneth added that the theory has three dimensions as follows:

1. Reductionism which means that the theory starts from the assumption that theories which do not directly refer to the object being observed nor verifiable statement, but he is a reference material for the observed phenomena. He is the kind of tool that can be referred to more quickly observed phenomena.

2. Instrumentalism which means that the theory is an instrument or a tool that will be used to calculate the judge a statement about an observation. Here the role of theory is to explain and predict.

3. Realism means that the theory is a set of propositions or proposition is a statement of the truth or untruth of real world phenomena or objects.