A literature review on accounting theory and its applications
Task: Read the two articles to answer a few questions. Article 1: Lamberton, G. (2005). Sustainability accounting – a brief history and conceptual framework, Accounting Forum, 29(1), 7-26. Article 2: DeZoort, T., Harrison, P. and Taylor, M. (2006). Accountability and auditor’s materiality judgements: The effects of differential pressure strength on conservatism, variability, and effort, Accounting, Organizations and Society, 31, 373-390. Which article is of normative accounting theory, which one is of positive accounting theory WhyWhich research is conceptual, which is empiricalWhat is the contribution made by Lamberton (2005) (Article 1) to accounting knowledge Make a brief explanation.
(1) Article of normative accounting theory and positive accounting theory
The article 2 normative theory due to the following reasons:
In article 2 the researchers have conducted ANOVA test and the results have been published based on which the research has been concluded (DeZoort, Harrison and Taylor, 2006).
Collecting data specially the quantitative data in the numbers that relates to theory.
Having a theory that the researcher does not knows whether the theory is true or false.
For testing the theory statistical or mathematic model for the data would be applied.
The result to the theory is true or false.
The article 1 is of positive theory due to the following reasons:
The Article clearly states about the conceptual framework of sustainability accounting (Lamberton, 2005). Positive accounting theory is concerning with many explaining accounting practicing techniques. Normative theories describe how some particular practices would be prescribed. Positive accounting theory involves in providing the resources for an organization and how functioning of accounting theories is used to assist. Actions of individuals are driven by their self-interest and in the manner of increasing their wealth.
The researchers would achieve many new results. For example,
The researchers should have to determine the fair value of goods.
The researchers should select the share prices in the future.
The researchers should expertise the costs, which is required.
(2) The research that is conceptual and empirical
Article one is based on conceptual research because of the following reasons:
In conceptual research practical experiments would not be involved. This research is observed by the current given information. In the qualitative research conceptual framework are founded,
Researchers would collect the information on current basis. Practical experiments wouldn’t be used and important reliable sources are in well mannered. The variables give new techniques to the researchers which helps them in finding the new topics for their research. By using relevant material and content the proper framework would be created.
Objects and non-objects of conceptual research:
• In conceptual research resources are required, a convenient form of research is needed, which is said to be the objectives of conceptual research.
• In conceptual research the reliability is less and conclusions are also less, which is said by the non-objective.
Article two is one based on empirical research due to the following reasons:
Empirical is said to the objects which are observable. It is depended on the experience;its sources are the evidence that are divided into the conclusion and observed. This is tested with a suitable experiment.
(3) The contribution made by Lamberton (2005)
The contribution made by Lamberton is that, the concept of sustainability, and it would be professional and popular in accounting. The techniques of sustainability are based on different interactions. Technical interactions and organizational interactions affect these factors. By referring to the organizational factors on the role of different disciplines and the research is behind on these factors which emphasize the use of control for the sustainability in the business model. The cost of sustainability would be deducted from using accounting principles.
Sustainable cost is the theoretical cost to states its organizational impacts, that the amount of the business model would be spent at the end of counting period. The stocks of natural capital with the changes of various categories of natural capital:
The critical or non-substitutable like oil, petroleum and many more.
The substitutable or nonrenewable like disposal wastage, and usage of energies.
The re-convertible like timbers and many more.
Forms of environment accounting were relying on the monetary units for measuring the social impacts in an increasing trend. Using multiple units for the measurement to access the performance for the to the dimensions of sustainability.
The article had been published in 2006 thus it makes a pavement for the new concepts in the modern accounting. Currently, every company across the globe have been trying to become more and more sustainable. As per the article, the GRI framework shows the environmental factors are being governed by several aspects such as materials, energy, water, and many more. Currently, these factors have become supreme factors of concern for multiple companies where these firms are trying to use more and more biodegradable materials as well as transforming to green energy making the firm more and more sustainable.
DeZoort, T., Harrison, P. and Taylor, M. (2006). Accountability and auditor’s materiality judgements: The effects of differential pressure strength on conservatism, variability, and effort, Accounting, Organizations and Society, 31, 373-390.
Lamberton, G. (2005). Sustainability accounting – a brief history and conceptual framework, Accounting Forum, 29(1), 7-26.