Usefulness of Accounting Theory to Practicing Accountants Today Research Proposal

Usefulness of Accounting Theory to Practicing Accountants Today - Research Proposal Example Throughout history, the need for a single and unified conceptual framework which will embody the needs of the business organization for financial reporting has been a pressing concern. The lack of established accounting theory to support the reporting of financial transactions and the production of financial reports called for the foundation of financial reporting. Without accounting theory, accountants grapple with the difficulty of producing reports which will clearly represent the company’s performance. Comparison and benchmarking cannot be accomplished since reporting is not supported by the same foundation. The need for a conceptual framework is even highlighted by the era of globalization which aims the creation of a single global village. However, it should also be noted that the usefulness of accounting theory is limited by the adherence of accountants which utilizes it. The financial fiascos that shook the global community highlight the need for a more stringent contr ol and adherence to the reporting process in order to produce financial reports which fully embodies the financial position of a business organization. In the early 1800s, accounting theories were random and ill-defined. Development was unstructured and the formalization of existing practices was still in the very preliminary stages. Scientific development was also quite ad hoc and inconsistent, yet 42 bulletins were already developed before 1970. These facts help magnify the importance of having a united adaptable system for the accounting profession to work consistently. The normative period began to emerge in 1956 and developed until 1970. This stage allowed the development of a set of norms for accounting practices and the commencement of the conceptual framework for accounting. It was divided into two dominant groups—the conceptual framework and the critics of historical cost. As the normative era was not being successfully accepted by the community the period ended as financial theories, and computer databases led to empirical research.