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- The APB acknowledged that the then current principles had not
been derived from the environment, objectives, and basic
features of financial accounting. Thus, the study was essentially
inductive in approach.
Pragmatic Approach
- The pragmatic approach to theory development is based on
the concept of utility or usefulness.
- Once the problem has been identified, the researcher
attempts to find a utilitarian solution; that is, one that will
resolve the problem.
- This does not suggest that the optimum solution has been
found or that the solution will accomplish some stated
objective. (Actually, the only objective may be to find a
"workable" solution to a problem.) Thus, any answers obtained
through the pragmatic approach should be viewed as tentative
solutions to problems.
Fundamental Analysis:
- The FASB has indicated that the primary goal of
accounting information is to provide investors with
relevant an reliable information so they can make
informed investment decisions.
Individual investors make the following investment decisions: