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What Is Accounting Theory? Definitions & Concepts
Understanding accounting in practice starts with theory. Accounting Theory is the set of guiding concepts and assumptions underlying accounting measurement, recognition, presentation, and disclosure. It helps explain why we use certain methods over others, shapes standard setting, and fosters consistency across reports. In this article, you’ll discover the fundamental premises like the going concern principle, matching principle, and recognition criteria. You’ll also explore how different theoretical perspectives (e.g. positive vs. normative) inform real accounting choices. Gain clarity on the theory behind your accounting work and improve your analytical skills.
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