Theory of Accounting

The theory of accounting is a basic complex that studies the organization of accounting (financial, tax and management), as well as some related disciplines. Accounting Theory Is the basis of all methods of financial and tax documentation at the enterprise.

Purpose of the accounting theory

The word "theory" came to us from the Greek language. And it means: "viewing" or "exploring". Therefore, it is still possible to define the concept of a science that studies accounting: the theory that explores and explains the basics of the subject matter of the profession of an accountant or bookkeeper.

The study of the theory of accounting is necessary to obtain a correct understanding and presentation of the essence of analysis and systematization of all economic and financial information of the organization, expressed in monetary form. The theory of accounting determines the place of processing of financial and tax documentation in the economic system of enterprise management, as well as the main economic accounting categories used in practical business.

Knowledge of the theoretical bases of accounting is especially important for understanding the functioning of a company, starting with its creation, that is, registration of the organizational and legal form, creation of authorized capital and subsequent implementation of all economic and financial operations necessary for business. All numerical data obtained during the activity must be fixed in the primary documents and registers, through which the received financial information can be processed using accounting accounts and deduce the financial result necessary for the calculation of taxes.

Methods of Calculation

The theory of accounting has an enduring value, both for profit and for its calculation. Using different methods of calculation, one can show profits with the same results in one case, and in the other, a loss. An example of such reporting can be a well-known case with the German concern Daimler-Benz. In two reports compiled by the company's accountant on the same data, completely different results were derived. The report for the New York Stock Exchange showed profit, and in the document for the German tax authorities - a loss. This discrepancy is explained by the different methodology of accounting for America and Germany. Such cases led to the emergence of several concepts or approaches to accounting theory.

Approaches to accounting theory

To date, accounting theory is characterized by the following concepts:

1. Tax;
2. economic;
3. legal;
4. behavioral;
5. ethical;
6. structural.

The most common is the tax approach. Although the use of it only in the entire accounting system used is somewhat unproductive. The purpose of tax accounting is to accurately calculate the numerical value of mandatory budget allocations, rather than an analysis of the prospects and opportunities to extract greater profits and reduce costs. Proceeding from the fact that the tax services are not interested in what method the company's income is measured, mixed approaches have been adopted. Therefore, in the structure of accounting, both the tax accounting method and the financial (economic) method are applied.

Nevertheless, the application of tax standards had a very big impact on the development of accounting and its practice. The accounting activity was significantly improved, became more consistent and informative. An example is the mandatory requirement for depreciation, introduced by tax regulations in 1909. This document served as an impetus for the search for better ways of calculating depreciation on movable and immovable property, their systematization, as well as the use of more convenient concepts for determining depreciation costs.