Attempts to Establish a Theory of Accounting

Attempts to Establisha Theory of Accounting
AIA and NYSE attempt to develop GAAP (1932)—5 broad principles became 1stchapter of ARB #1AAA Tentative Statement of Accounting Principles Affecting Underlying Corporate Annual Reports (1936)AICPA Committee on Accounting ProcedureAICPA Statement of Accounting Principles issued by Sanders, Hatfield, and Moore (1938)Paton and Littleton’s Introduction to Corporate Accounting Standards (1940)The Basis for Accounting Principles—Scott (1941) and Cultural Significance of AccountsOrientation postulate (social, political, and economic)Pervasive principle of justice and equitable treatment to all users of informationTruth and fairness (objectivity, freedom from bias, and impartiality)Adaptability and consistencyScientific methodNormative
Attempts to Establisha Theory of Accounting
AICPA Accounting Principles BoardAccounting Research Study #1 Basic Postulates of Accounting byMoonitz(1961)Accounting Research Study #3 Tentative Set of Broad Accounting Principles bySprouseandMoonitz(1962)Inventory of GAAP by Grady (1965)A Statement of Basic Accounting Theory (ASOBAT) issued by AAA (1966)APB issued Statement 4 Basic Concepts and Accounting Principles Underlying Financial Statements of Business Enterprises
Attempts to Establisha Theory of Accounting
AICPATruebloodCommittee identifies objectives of accounting (1973)Useful for making economic decisionsServe primarily those users having limited authority, ability, or resources to obtain information and rely on financial statements as their principal source of information about an entity’s economic activitiesInformation useful to investors and creditors in predicting, comparing, and evaluating potential cash flows—amounts, timing, and uncertaintyInformation for predicting, comparing, and evaluating earning powerInformation useful in judging management’s ability to use resources effectively in achieving an entity’s goalsFactual and interpretative about transactions and other eventsStatement of financial positionStatement of periodic earningsStatement of financial activities relating to significant cash flowsFinancial forecasts that enhance the reliability of user predictionsInformation for governmental and not-for-profit to evaluate effectiveness of management of resources in achieving identified goalsInformation on an entity’s activities affecting society
Attempts to Establisha Theory of Accounting
AAA issues Statement on Accounting Theory and Theory Acceptance (SATTA) in 1977No single, universally accepted basic accounting theory existedFASB issues Statements of Financial Accounting Concepts 1-7 (1978 -2000); Conceptual FrameworkIASB Conceptual Framework