Вы находитесь на странице: 1из 4


Based on Reading 2, Discuss and conclude how does accounting evolve or develop?
In Mesopotamia, the agreement of transaction recorded on clay tablets which prepared
by scribe. In ancient Egypt, the use of papyrus allowed Egyptian bookkeeper to prepare more
detailed records then Mesopotamia, however the gold and silver still not as units of fungible
value use for accumulation and summation. During Chao dynasty, the agreement of
transaction record function expanded to evaluate the efficiency of governmental programs
and the civil servants administered them. In Greece, the governments finances are legislated
by public accountants and controlled to allow its citizenry to maintain real authority. The
coined money was introduced. In ancient Rome, the government and banking accounts kept
by the heads of families, the daily entry of household receipts and payments were kept in
daybook, and the monthly postings were made to cashbook because the ancient Rome
citizens are required to submit regular statements of assets and liabilities, used for taxation
and determination of civil rights. The governmental receipts and disbursement used an
elaborate system of checks and balances and managed by treasury. The transition of republic
to empire invented the use of annual budget to determine the Roman citizen ability to pay tax.
In the medieval era, the treasurer will prepared wooden tally sticks and cut as a record of the
transactions twice a year to assess the rents, fines and taxes due to the King of England. In
14th century, Italian developed double entry bookkeeping. De Computis describe the basic
system of book and accounts, specialized accounting issues of merchants, and trial balance
had been allowed the merchants to determine their profits. The Chartered Accountant
originated from Scotland and adopted by English institutes in 1880. The Industrial
Revolution boost the growth of economy in England and its capital flowing out to the United
States. In order to audit these investments, Scottish and British accountants stayed on and set
up practice in America. After Civil War ended, the industry began to overtake agriculture and
the economic grow rapidly arises financial scandals, monopoly, and exploitation of workers.
Government control these issues by enforcing anti-trust law and establishment of uniform
system of accounting. The American corporations balance sheets initially drafted for bankers
who concerns about the liquidity of company. When the inventory depression occurs, the
corporations expanding their finance source by offering of corporate stock. Stockholders also
became the users of financial statements. The rise of income taxation and cost accounting
shifted focus to revenues and expenses. The fund statements initially focus on liquidity

through tracking the fluctuations of working capital eventually used to measure the actual
flow of monies.

Explain the importance of accounting theory to the development of accounting
The normative methodology focuses on the principles of accounting and questions the
existing theory to describe what should it be. It is a deductive process in which objectives are
formulated, from which principles are developed. It is a goal-oriented theory to represent the
real world situation not as they are, but as they should be. The normative theories are
characterised by goal assumptions and deduction.
The descriptive methodology investigates the underlying phenomena to describe what
they are and evaluate the practice itself. It is an inductive process which focuses on
observations of the real world and aim to record the underlying phenomena. As go further, the
predictive process not only record the observations but also explain and predicts them, as
known as positive research methodology. Positive theories attempts to describe real world
situations and involves empirical observations of the relevant phenomena from which a
problem is defined.
In the normative period (1956-1970), the normative approach is not used because of it
is not scientific. In order to be more scientific, the normative approach switch to positive
research methodology. A more pragmatic process developed, the accounting researches
cannot rely on the outcome of the process because it is not necessarily be correct in terms of
deductive logic. Then, the decision usefulness orientation in accounting developed and focus
shifted from the principles of accounting to the outcome of the accounting process.
The positive accounting theory developed by formulating hypothesis or designing
models and testing them. Capital market research in finance link accounting data and quoted
share prices. In the credit crises, the appropriateness of fair value measures in inactive
markets or illiquid markets are questionable, the standard setters required to create
comprehensive and consistent accounting standards to all capital markets. The economic
theory in positive economic theory is individuals action is driven by self-interest and act in
an opportunistic way to the extent that will increase their wealth.

The effect of decision usefulness orientation is it introduce the purpose of the

communication process which is to permit informed judgements and decisions by users of
information. It also assert the basic objectives of financial statements. The FASB and IASB
includes the decision usefulness objective into their conceptual framework. However, the
historical cost problem arises because the theoretically correct financial statements might not
be useful. Thus, the fair value or other valuations started to be incorporating into financial
reporting. It is a grounded theory developed indirectly through the continuous assessment and
recording of data by standard setters.
The interpretative and critical research is concerned with the effect of accounting on
people. The interpretative research involves describing, explaining and incorporates the
perceptions and feelings of people. In the pragmatic and political process of standard setting
establish the reasons behind the consultative process. The primary goal is to record the data in
a neutral stance. However, the researches have to reveal their assumptions behind their
critical research.