Relationships in Accounting Theory.

Abstract The body of accounting knowledge consists of various related elements which form a logical and meaningful pattern. Absence of a uniform concept of the pattern. Absence of a uniform concept of the pattern-the structure of accounting theory-continues to hinder efforts to develop and clarify accounting theory. Development of accounting theory must involve a flow of ideas from the specific details of accounting practice to the more general elements of accounting knowledge as well as a flow from the general to the specific. Consequently, neither the deductive approach nor the inductive approach to development of accounting theory is singularly sufficient. Accurate graphic representation of the structure of accounting theory must convey the image of multi-related elements that form the body of accounting knowledge. The most general element in the structure of accounting theory explains the reason for the existence of accounting, and is called the postulate of accounting. Progressively more specific elements are the accounting principles, standards, practices, instructions, and activities. Concepts and conventions do not exist as separate elements in the structure, but function as unifying forces with respect to the standards, practices, instructions, and activities.