Advance Financial Accounting Newly Projected Accounting

Question: Describe about the Advance Financial Accounting for Newly Projected Accounting. Answer: 1 a.Positive accounting theory: Positive accounting theory can be defined as the appearance of neo-classical economical concept. It is understood as the principle of balanced choice of theory, which consists of self-interest materiality usually, defined as the opportunistic behavior for all accounting activities. Corporate social responsibility study discloses by making the use of economic theory that positive accounting theory tries its effort to make a good prediction of the current world and transform them into accounting transactions. Watts, R.L. and Zimmerman (2012) reviewed that normative theories gives an explanatory statement and predict that actions which accounting entities should select to the newly projected accounting standard. The general intention of the positive accounting theory is to recognize and forecast the choice of accounting procedures across conflicting business entity. It helps in identifying the prospect for economic prospect, which prevails in an organization. In relation to Positive Accounting Theory there is a need that business entities will want to reduce cost associated with the contracts. Positive accounting identifies circumstances, which requires the managers to obtain the flexibility in selecting accounting policies in terms of changing situation. 1.b. Legitimacy theory: This depends upon the circumstances that there is societal agreement between the business entity and the society under which it functions. Lanis and Richardson (2012) legitimacy theory defines that an organization regularly seeks to guarantee that they function within the boundary of their relevant society. While undertaking a legitimacy theoretical viewpoint, a corporation would necessarily report on the actions if management perceives that, the communities under which it operates anticipate these activities. It should be noted that there are no usually established theory for amplification of CSR disclosure practice as current study in the CSR literature is principally dependent on legitimacy theory. Lanis and Richardson (2012) reviewed that it is possible that the legitimacy theory is extensively accepted theory to give explanation on the environmental and social disclosure. Whereas on the other hand, Hoque et al. (2013) opinion that legitimacy theory has the upper hand over additional theories, which provides disclosure of strategies that organizations might accept to legitimate their presence that might be empirically, tested. 1.c Stakeholder theory: For decades, scholar have reviewed that the relationship between the business entities and societies concerning the corporate social responsibilities for stakeholders. Several philosophical approaches have been mentioned in the discussion regarding the challenges of integrating the ethical perspective of CSR along with practical and managerial perspective of the stakeholder theory. (Sen and Cowley (2013) The theory of stakeholder makes the difference between the narrow and the wider concept in contrast to the importance of stakeholders. Under the narrow concept concerning the stakeholder, it defines the significance groups, which are proportionately related to the vital economic interest of the business entity. In addition to this, it also signifies the essence of sustaining the moral relations amid the organization and the stakeholders in order to represent the core of the normative stakeholder theory. The wider concept on the other hand is based on the empirical study where Business Corporation in reality influences the interest of the individual and is usually relying on someone. This perception is understood as the core of the expressive theory as both the conceptual framework is based on two important assumptions. Stakeholders are understood as individual or groups who have the ability to influence the corporations and rely on the corporation Business Corporation on the other hand either incurs expenditure for them or brings beneficiary gain through which they manage to influence the corporation. 1.d. Institutional theory: As stated by Setyorini and Ishak (2012) the conceptual framework of institutional theory is considered as strong candidate responsible for development. It is noteworthy to denote that the theory not only introduced a specific number of social science but also brings in the effective way of promoting integration of diverse perspective. The introduction of institutional theory under the framework of CSR enables a better understanding of business responsibilities in two main aspects one being the diversity and the other being dynamics. This corresponds widely to the two of the most leading schools of contemplation under institutional theory, which have a propensity to emphasize the worldwide distribution of practices and the acceptance of theories by the business organization. On the absence or presence of institutional factors, there is relevant difference between the institutional factors and practices as because institutional theories play a role of mediators of behavior of the socially responsible business. Setyorini and Ishak (2012) reviewed that the existence of outside forces influences the business organizations to adopt the social responsibilities and practices. This shows that the corporations have the tendency to adopt socially responsible behavior while regulating the cultural institutions. 2: Criticism and limitations of positive accounting theory: One of the recently emphasized theoretical approaches that has been emphasized is positive accounting theory. Setyorini and Ishak (2012) opinioned their criticism on different perspective directed towards positive accounting theory. Several critics refer to the technical aspects of this research. Corporate social responsibility study discloses with the help of economic theory that positive accounting theory puts its best endeavor to make a better forecast of the existing world and convert them into accounting transactions. Critiques have viewed their concerned with the philosophy of issues, which is centered on the limitations of economic based accounting research. Bonin (2013) responded to the most published critiques of positive accounting theory. They significantly mentioned the methodological criticism have been unsuccessful on the accounting research. The study provides a critical examination of the positive accounting theory and its limitations by evaluating the alleged failure s based on the economic parameters. Positive accounting theory is understood to have been applied in terms of economic positivism. By tracing down the historical grounds of positive accounting theory with the help of economic roots illustrates that the positive aspects of accounting theory is more rhetoric than methodology. Christensen et al. (2016) argued that positive accounting theory represents shifting of accounting problems towards the domain of research, which is appropriate in the areas of economic activities. On the other hand, the concerned study provides a review of based on the publications of critiques that positive accounting theory may not be very effective, as economic based critiques have emphasized the limitations of equilibrium-based assessment shows a potential avenue for procedural analysis of positive accounting theory. It is rightly denoted that positive accounting theory has been a subject of various criticism ever since it came into the scenario. For instance, Fernando and Lawrence (2014) criticized on the grounds that the theory has limited itself under the positive study of accounting practice and accounting practitioners have restricted the expansion and progress of the theory. The accounting practitioners did not pay any heed for the evaluation and assessment of accounting practice adopted by them. Hui et al. (2012) on the other hand further analyzed the potential of accomplishment of as being nil. Positive accounting theory has been criticized for its methodological intolerance and asserts that normative accounting theory had a legitimate place in accounting. In addition to this, many researchers have widely provided a negative appraisal of positive accounting theory by saying that it narrowed the researchers approach and focus. Watts and Zimmerman (2012) on the other hand, did not agreed to the assessment and opinion directed towards positive accounting theory. Frey and Stutzer (2014) examined that positive accounting theory attracted several academics but also attempted to mention that the theory fails to address social disclosure. Limitations of positive accounting theory: Inadequate prescription: Positive accounting theory does not provide any prescription and it also do not act as a means of enhancing and improving the accounting practices. Assumptions are not valid: It should be noted that positive accounting theory suffers from the limitations of not being value free as it stresses on the assumptions that all the actions is driven by self interest. It is related to the fundamentally assumes that all the actions are driven by a desire to maximize the wealth of an individual (Setyorini and Ishak 2012). Researchers have assumed that positive accounting theory based on negative prospect of human kind. Stagnant: Ever since the inceptions of positive accounting theory, the issues that has been brought forward have not represented any significant development under this theory. Individual choices vs. several alternatives: Several researches performed under the framework of positive accounting theory takes into the considerations individual accounting choices when put into practice (Bonin 2013). On the other hand, research shows that many business entities have large number of accounting alternatives to choose from, which may create an opposing impact on the financial performance and position of the organization. Too simplistic: The study provides another limitation of positive accounting theory by stating that the measurement and proxies, which is used in this theory, is far too simplistic. Thus, positive number of limitations scientifically flaws accounting theory it lack universality of the conclusions (Hribar et al. 2013). Hence, it should be noted that while conducting empirical research based on large-scale parameters it was concluded that positive accounting theory ignores the areas of numerous organizational relationships. This is the reason behind the limitations, which is suffered by positive accounting theory. Reference List: Bonin, H., 2013.Generational accounting: theory and application. Springer Science Business Media. 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