A Priori Theories of Accounting

Detailed Definition

A priori theories of accounting are frameworks used in the field of accounting to develop measurement and valuation systems based on logical deduction from predefined principles or axioms. Unlike empirical approaches that rely on observed data and experiences, a priori theories start from fundamental assumptions or propositions considered self-evident. These theories became particularly prominent in the 1960s, contributing significantly to the theoretical foundation of financial accounting.

Examples

1. Historical Cost Accounting: Historical cost accounting is an a priori theory where assets and liabilities are recorded based on their original acquisition costs. The assumption is that the historical cost is objective and verifiable.

2. Current Value Accounting: This approach values assets and liabilities at their current market prices. Underlying assumptions include the belief that current prices provide more relevant and timelier information for decision-making.

3. Conceptual Framework Projects: The Financial Accounting Standards Board (FASB) and International Accounting Standards Board (IASB) have developed conceptual frameworks based on a priori reasoning, defining concepts that underlie financial reporting to ensure consistency and coherence in standard-setting.

Frequently Asked Questions (FAQs)

What distinguishes a priori theories from empirical accounting theories?

A priori theories rely on deductive reasoning and logical derivation from accepted axioms, whereas empirical theories are based on observations, experiments, and inductive reasoning.

How did the 1960s influence a priori research in accounting?

The 1960s were significant for a priori research as theorists focused on developing normative accounting theories and conceptual frameworks using logical deduction from predetermined principles.

Are a priori theories still relevant in contemporary accounting?

Yes, a priori theories continue to provide the foundational concepts and principles that guide the development of accounting standards and practices.

How do a priori theories benefit the accounting profession?

A priori theories offer a structured and consistent approach to developing measurement and valuation systems, enhancing the reliability and comparability of financial information.

Can a priori theories be applied to all types of accounting?

While often seen in financial accounting, a priori theories can also be useful in developing principles and standards across various types of accounting, including managerial and cost accounting.

Related Terms

Normative Theories of Accounting

Normative theories prescribe how accounting practices should be conducted based on a set of ethical or theoretical foundations rather than describing how practices are currently observed.

Positive Accounting Theory

Positive accounting theory seeks to explain and predict actual accounting practices, relying on empirical data and observations rather than solely on axioms or assumed principles.

Conceptual Framework

A coherent system of interrelated objectives and fundamentals that guide the development and application of accounting standards and practices based on a priori reasoning.

Historical Cost Accounting

An approach where transactions, assets, and liabilities are recorded at their initial acquisition costs based on a priori assumptions of objectivity and verifiability.

Online References

1. Investopedia: A Priori Definition and Applications in Accounting
2. AccountingTools: Conceptual Framework in Accounting
3. Financial Accounting Standards Board (FASB): Conceptual Framework Project
4. International Accounting Standards Board (IASB): Conceptual Framework

Suggested Books for Further Studies

1. “Financial Accounting Theory” by William Scott: This book delves into both empirical and a priori theories, providing comprehensive coverage of financial accounting theories.

2. “Accounting Theory: Conceptual Issues in a Political and Economic Environment” by Harry I. Wolk, James L. Dodd, and Michael G. Tearney: Explores various accounting theories including a priori theories, and discusses their impact on accounting practices and standards.

3. “The Structure of Accounting Theory” by Yuji Ijiri: Focuses on the logical and deductive structures underlying accounting theories, emphasizing a priori reasoning.

Accounting Basics: “A Priori Theories of Accounting” Fundamentals Quiz

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