Accounting Policy
INTRODUCTION
This research critiques the
This is an excerpt from the paper...
This research critiques the theoretical propositions advanced by Lauren Kelly Newton in Accounting Policy Formula tion: The Role of Corporate Management,1 with respect to the underlying basis of the policy framework within which account ing theory is developed. In considering the basis for account ing policy formulation, Kelly Newton emphasizes the changing demands of the environment within which accounting functions, and the political and social character of the accounting pro cess, while developing a policy making model for the profes sion.2 Underlying the development of a policy framework, how ever, is the proposition advanced by Kelly Newton that the development of accounting policy and theory should be based upon positive philosophical imperatives, as opposed to norma tive philosophical imperatives.3In this critique, Kelly Newton's propositions are consi dered within the context of normative and positive philosophi cal concepts. Further, the appropriateness is assessed for the 1L. Kelly Newton, Accounting Policy Formulation: The Role of Corporate Management (Reading, Massachusetts: Addison Wesley Publishing Company, 1980), p. v x, 1 163. 2Ibid., pp. v, vii ix, 3 5, 26 31, 106 107, 141 142, 158 160. 1 2 resolution of accounting issues (1) on the basis of accounting policies with a positive, as opposed to a normative character generally, and (2), more specifically, through application of Kelly Newton's proposed policy m
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was not addressing the normative posi tive issue, his contentions appear to be consistent with those of Kelly Newton. There is, in his statements, strong support for the positive approach.__________
13J. S. Demski, "Positive Accounting Theory: A Review," Accounting, Organizations and Society XIII, 6 (June 1988): 623 629.
14A. C. Littleton, Structure of Accounting Theory (Engle wood Cliffs, New Jersey: Prentic Hall, Inc., 1953), p. 127.
15K. C. Buckner, Littleton's Contribution to the Theory of Accountancy (Atlanta, Georgia: College of Business Administra tion/Georgia State University, 1975), p. 190.
16Ibid., p. 191. 6
NORMATIVE POSITIVE CONSIDERATIONS
Kelly Newton contends that normative approaches in the development of accounting policy have proved to be deficient.17 Proponents of a positive base for accounting theory generally point to the example of the field of economics, and to the growing relationshoip between accounting and economics, as jus tifications for their position.18
Positive economics deals with the explanation and predic tion of actual resource allocation decisions made by consumers, producers, and, to a lesser extent, governments19 By contrast, normative economics deals with the deve
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Univer sity Press, Publishing Company, MODEL Kelly Newton, Society XIII, Littleton Littleton, Book Company, VIII Summer, Irwin Inc, CONSIDERATIONS Kelly Newton, CHARACTER ACCOUNTING, positive accounting, accounting theory, accounting policy, positive economics, positive accounting theory, normative accounting, cliffs jersey, normative economics, development accounting, englewood cliffs, accounting principles, englewood cliffs jersey, american institute certified, society xiii 6, institute certified public,
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INTRODUCTION
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