The Theory and Practice of Accounting.

Abstract In this article, the author discusses the theory and practice of accounting. He differentiated between beliefs and theories, defines propositions and highlights that a theory of accounting includes a collection of propositions or assertions. He emphasizes that recorded experience is not part of a theory of accounting but is one of the sources which give rise to propositions. He explains the two aspects to the study of accounting, namely, the pure aspect and the applied aspect and their provinces. He stresses on the importance of the separation of entities for the purpose of accounting and the inclusion of propositions in a theory of accounting while ignoring the practical procedure. He illustrates different propositions in a theory of accounting which include records, ascertaining profit and determination of depreciation. The net effect of the entity's transactions and the position of the entity have been described as results obtained from the application of propositions to entities and the requirement by law to obtain certain results from certain accounting entities have been enumerated. The author describes accounting as a theory and as a practice.