An Introduction to Accounting Theory | Accounting ebook Download

An Introduction to Accounting Theory




This online textbook is a one stop resource for accounting theory. The whole field is covered in plain language.

It begins by explaining what theory is, why and how agency theory underpins accounting and how to distinguish positive from normative theories. The book covers the IASB conceptual framework and its changing emphases, how accounting standards fit within the framework, and how standards exemplify theories of regulation. Capital market theory is covered with minimal mathematics, and accounting pathologies with minimal pontification. Theories of measurement and valuation are explained. Theories of accountability are compared. CSR, sustainability and integrated accounting are evaluated. In the final chapter issues in accounting that could emerge in the next millennium are discussed.

Far more than its wordier competitors, the book aims to develop the readers’ ability to think critically about accounting and be aware of its inconsistencies, assumptions and omissions.


  1. Accounting and Agency Theory
    1. What theory is
    2. Hypotheses
    3. Theories, laws and theorems
    4. Positive facts and normative opinions
    5. Accounting theory, economics and law
    6. Agency theory
  2. The Conceptual Framework
    1. Introduction
    2. Key elements of the framework
    3. The purpose of accounts
    4. Characteristics of accounting that conform to the framework
    5. Accounting elements
    6. Frameworks and legitimacy
  3. Accounting Standards
    1. Introduction to regulation
    2. Introduction to constructionism
    3. Standards based on rules or on principles
    4. Intangibles and goodwill
    5. The reporting entity
    6. Liabilities
    7. Whose fair value?
    8. Table of International Accounting Standards current at the start of 2016
  4. Measurement and Valuation
    1. Introduction
    2. Measurement scales
    3. Valuation
    4. Valuation under inflation
    5. Two approaches and clean surplus theory
    6. Fair value and faithful representation
  5. Accountng and Capital Markets
    1. Does accounting affect stock market prices?
    2. Earnings management
  6. Accountability
    1. Introduction
    2. Auditing’s market role
    3. Theories of Accountability
    4. Critical Perspectives in Accounting
    5. Ethical Paradigms of Accountability
    6. Ethics, Ethical Development and Professional Accountants
  7. Accounting Pathologies – Fraud, Failure and Evasion
    1. Audit expectation gap
    2. Fraud
    3. Manipulation and Positive Accounting Theory
    4. Accounting and Business Failure
    5. Theory and Accounting Pathologies
  8. The New Accounting Reports: Sustainability and Integration
    1. Introduction – CSR
    2. The Global Reporting Initiative (GRI)
    3. The International Integrated Reporting Council (IIRC)
    4. Conclusion
  9. The Unfinished Work of Accounting Theory
    1. Space Age Accounting
    2. The Next Hundred Years
    3. The Next Hundred Light Years
    4. Public accounting for the actual public
    5. Deep equity accounting
    6. A Critical conclusion

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