Sample on Accounting Theory and Current Issue

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Introduction to Pat

PAT which is considered as the most significant tool because it gives full information regarding to the actual transaction which take place in business world (Gunderson and et.al., 2013). This method helps to convert all accounting transaction and make effective predictions about the accounting entries. It is also considered as the scientific methods which helps to organization to make intellectual decisions' and also assist to understand the real cause of effect relationship. As according to the concept, of positive accounting to the manager and firm need to choose such accounting methods through these concepts firm can represent their won performance significantly but these concepts has some positive and negative impacts (Ball, 2013). This report make analysis on the Positive Accounting theory and critically evaluate it in effective approach. Along with this report also make analysis on the Hypotheses and their effectiveness of Pat model. In the last it makes analysis on the limitations of PAT article will be described in the present report.

Aim and Objectives

The Main aim of this research study is to gain cleat understanding of the Positive Accounting Theory:

Objective

  • To gain knowledge on the Positive Accounting Theory
  • To Know to limitation and identify the significant of PAT
  • To make clear understanding of the Positive accounting concepts.
  • To understand the effectiveness of article theory and their practical approach.
  • To make recommendation on accounting methods which assist in preparing accounting reports.

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Research Question

In order to make effective research the PAT along with research hypotheses which are based on the statistical tool. This helps to research to make effective research on accounting concepts. Through this tool, actual objectives of the research can be achieved (Gunderson and et.al., 2013). PAT which is considered as the most significant tool because it gives full information regarding to the actual transaction which take place in business world. It is commonly used in the quantitative positive accounting research and null hypothesis is done in computerized manner. In this present report researcher use hypotheses which is appropriate and make able to understand the usefulness of the positive accounting theory. As per the discussion, in this present report facts are totally based on imagination and no one has control on the imagination (Indjejikian, Matějka and Schloetzer, 2014). This show that accounting figures can changes any time so mangers need to be prepared have to be prepared for the modification and modifications should be made accordingly hypothesis. With the help of this hypothesis scholar draw literature review for conducting research both qualitative and quantitative both the methods have been used. So is can be concluded that by using different types of methods and statistical tool helps to reach to make their research more effective. It also helps to make their hypotheses accurate and authentic. Along with this some arguments are also presents PAT is not effecting nay transaction and it also considered that very few people have knowledge about it. But there is some research which make arguments that PAT approach's results are equal to their other research results.

Theoretical Framework

PAT is very useful concepts which helps to organization to achieves their significant objectives. It concepts includes different concepts innumerable computations, problem solving, give in dept information in specif format So can be analyzed and interpreted by people. It helps to them in decision making process (Penman, 2016). To apply this concept on organization is choice of the manger but apply this concept does not affect pricing and standards which is related to accounting decisions. In order to make implication of the PAT concepts regulations is the biggest factor which can influences the overall transaction and financial reports. PAT is effective financial tool that assists to organization to predicts the accounting practices. This theory is also consisting with accounting standards and their hypotheses. PAT is that concepts which practice concept on the basis of current situations (Crawford and Lepine, 2013) But it is not necessary that predication is always right and along with this record are also not make effective approach in which they need to take model is not making effective practices. The positive approach to the development accounting relies on the basic assumption that helps to policy makers to make effective decision (Waymire, 2014). It assumes that all the decisions that are being made would be a result of rationally where accountants can follow the best options.

In this report it critically evaluation can be on the basis of prices investors which make their decisions on the basis on this theory (Penman, 2016). On the other hand, there are some other accounting theory which give completely different types of direction to the researcher. There are two types of accounting concepts which can be used by normative or positive approach. The normative frameworks are conceptual frameworks which is used by organization. With the help of this theory manager of company can understand ways in which financial records are modified. There is much research which make strong criticisms on the use of PAT approach but it is still not loss its significance and also apply by business concern under in many situations. The aim of this concept is to make concentrates only on the theoretical area and economic aspects of organizations (Shiino, Stiner and Stiner Jr, 2014)

Sot is can be said that PAT does not focus perception and does not focus on improvement of accounting practices. The positive approach does not alternatives in the existing approaches or principles in case they are considered as irreverent. PAT make analysis only existing principles and make no recommendation for the principles that need to be used. By conducting research, it is found that PAT contain some assumptions for their self-interested and there are one other facts which make any kind of modification (Waymire, 2014). So it is say that normative approach is more effective. Thus, it is clear that normative approach presents extremely practical way methodologies for development and formulation of accounting theories. On the other hand, positive approaches only help in analyzing and assessment the nature of the methodologies adopted.

Significance and Limitations of the Article

Positive Accounting Theory is considered as the concept that possess various limitations because of this accurate report could not be prepared by the firm. One of the main limitation of PAT theory is that lack of prescription influences the implementation of the theory. However, particular research assesses that it helps scholars to practice positive accounting within firm and attain desired objectives (Beattie, 2014). With the help of PAT theory, it assists in identifying that no prescription is required in order to implement the model and thus identify the issues related to the model. Further. It also evaluates that such theory does not give any detailed information regarding improvement within the accounting practice and thus helps firm to improve their performance in market. Thus, through adopting such accounting practice it helps in implementing theoretical framework so that deficiencies could be identified. Therefore, iti s essential for businesses implementing PAT theory needs to bring improvement so that desired objectives could be attained. Thus, proper strategy need to be implemented in regard to adopt effective accounting theory and thus provide proper solution so that managers of firm could overcome the same (Bublitz, Philipich & Blatz, 2015). However, if the managers do not possess effective knowledge regarding PAT than it impacts upon the final report prepared by the firm. Therefore, positive accounting required to be effectively practices so that lack of interest in the numerical values impacts upon the implementation of accounting report.

Furthermore, another limitation faced by positive accounting theory is that it is not value free while it requires certain cost for implementing it within business as it helps in identifying self-interest so that managers of firm faces problem in regard to carry out good accounting practices. Through the given article on positive accounting theory it helps in developing fundamental assumption that it does not help firm in accomplishing the study in an effective way (Glover, 2014). However, it criticizes the researchers view point upon good accounting system which results in developing self-interest so that issues faced could be overcome. There is another crucial limitation of PAT that it is stagnant and thus it creates issues for business that needs to be overcome by adopting effective theory so that business could enhance their operations in an effective way. However, such issues have been prevailing since 1970 but in current time businesses have been added certain effective accounting system that results in overcoming the major problems so that best results could be attained. Positive Accounting Theory helps managers of firm to identify that implementing positive accounting pattern results in overcoming the issues faced by firm and thus develop appropriate measures and improve accounting practices (Wang, Che, Fan & Gu, 2014).

Methodology used in the article

Researcher uses several methodologies in regard to carry out study upon positive accounting pattern and thus selects one methodology from qualitative and quantitative method. Here, researcher uses qualitative method has been adopted that result in implementing PAT theory within study. Further, exploratory research design helps researcher to carry out the study in regard to implement the PAT theory. All such method results in collecting data and thus obtains desired outcomes (Dufour, Teller & Luu, 2014). In the present research, descriptive research deign has been used which results in providing accurate outcomes and helps researcher to improve the PAT in order to implement good accounting system. Researcher also helps in supporting the positive accounting theory through using qualitative research method and thus helps manager in regard to implement positive accounting system and achieves desired results.

However, the main benefit of implementing qualitative tools results in providing accurate results so that PAT could be effectively implemented. While, implementing such method helps researcher to support the observation and thus collect the information through looking upon effective accounting practices implemented within firm. Such research method is considered as implementing results in obtaining positive outcomes regarding PAT theory and improving accounting system within firm (Fernando & Lawrence, 2014). Through implementing such theory, it helps in obtaining effective subject and thus obtains knowledge about PAT.

Limitations

There are various limitations faced by researcher at the time of conducting the study upon positive accounting theory. However, the main issue faced by researcher at the time of implementing PAT is lack of time. Thus, it is one of the effective issue faced by researcher as they need to review various articles based upon positive accounting theory (Beattie, 2014). However, researcher faces issues related to time duration in regard to implement mathematical formulas. Hence, they are not able to provide accurate results so that possible outcomes could be attained. Moreover, another limitation faced by scholar is regarding lack of funds. Thus, it is another major issue that restricts researcher to use the data for using PAT. Hence, these are major limitations faced by researcher in regard to implement positive accounting theory.

Hence, all the limitation faced by researcher and thus it affects the study. However, it is essential for scholar to obtain effective results and thus implementing appropriate objectives and thus PAT could be implemented in an efficient manner. Also, it could be evaluated that implementing theoretical framework helps in adopting effective approach and thus improve the PAT within firm in regard to obtain positive accounting (Bublitz, Philipich & Blatz, 2015). Further, implementing methodologies helps in selecting qualitative research and thus affects the actual objectives of study so that desired targets could be attained.

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Conclusion

From the overall report it could be summed up that PAT theory results in identifying the positive accounting system and thus through implementing the same it helps in overcoming the ill effects of accounting within business. Also, it has been identified that PAT theory possess certain importance as well as limitations. Therefore, it is essential for researcher to overcome the identified problems and thus improve the performance of firm. Researcher selects qualitative data in regard to explain the information and test the same.

 
 
 
 
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