CHAPTER I

INTRODUCTION

1 1 Background
Each theory is a recognized knowledge of his truth. The appearance of a theory is
not something that happens suddenly. The theory will appear based on a process of
testing assumptions, and summary. This means that a theory must be formed from
assumptions about reality (ontology), which continues on a quest of truth based on
assumptions (epistemology) as well as the top goal of Science (axiology), then on the
basis of epistemology which is held to be formulated in testing the methodology of
knowledge. Obviously the existence of that ontology, epistemology, axiology, and
methodology is something related. (Kamayanti, 2014)
In understanding the definition of theory, also needs to be understood about the
ontological assumptions that underlie the definition shall include. For example, if taken
according to the theories of definition Belkaoui (2004:104), then the theory is evidence-
evidence which connects the concepts in the form of the hypothesis to be tested. The
elements contained in one theory was the concept, evidence, and hypotheses, which are
related in a systematic structure that lets it gives explanations and predictions. This is a
view of the theory of one perspective of a positivist assumption recognizes that reality is
a systematic and have a relationship of hypo-deductive or causality. On the other hand is
actually a theory can be viewed from the top five levels (Llewelyn, 2003) could have
been a grand theory, conceptual tools, philosophical (meta) theories, concepts and ideas.
In fact the American Accounting Association itself has stated that "... empirical studies ...
may initiate cycle of theory development " (death and Abdel-Ajinkya, 1979:10), but also
did not deny there is another approach, namely bakwa approach naturalistic or interactive
that will produce similar theory with grounded theory (Abdel-death and Ajinkya,
1979:17).
The researchers have applied the accounting methodology – the methodology and
different theories to examine the entire possibility of problems that pentig field. In the
beginning, the beginning of the 1970s, researchers apriopri like this is criticized as
theoretically imperfect or has a value that is in doubt. In 1970, Gonedes and Dopuch
argues that a priori model that justifies the prominence of a set of procedures –
accounting procedures it is not possible. Fortunately Wells, in an influential article in
1976, championing research a priori as a step required in the revolution's accounting
thought. According to Belkaoui (2011:104)
Wells goes on to point out that the events – events that occur in the accounting
seemed to follow a pattern described by Kuhn as a successful revolution, so that the
discipline of accounting emerges from a crisis conditions. Briefly in Kuhn's thesis is a
science will be dominated by a revolution in which the reigning paradigm will be
replaced by a new dominant paradigm. The main thing of the revolutionary patterns this
is Kuhn definition of the word "paradigm". If it is assumed that for a while the definition
as it has possibilities to happen, the next step is to identify the paradigm – the paradigm
in accounting.
Step ni i taken in 1977 by the American Accounting Association – AAA
(American Accounting Association) with the publication of the Statement on Accounting
Theory Acceptance-SOATATA (statement of Accounting Theory and Accounting
Acceptance). This Pernyaatan consider developments – developments that occur in the
thinking of accounting from the viewpoint of "philosophy" science that is seen in terms
of thinking by Kuhn on how progress happens in science SOATATA identified the three
dominant theoretical approaches:
a. The classical Approach (the actual profit/inductive), used by both "normative
deduksionis" as well as the author of positive and inductive
b. The approach of "usability decisions" is used by those who emphasize the model –
decision-making model (keprilakuan and research level accounting basis)
c. The approach of "information/economy", with a distinction being made between
"individual cases" single and multi individual "case
Some of the results of research of accounting explains some of the role of
accounting in favor that any condition of the phenomena that appear in bidag economic,
social, political and predict the phenomenon will arise in the future then needed a theory
as his supporters, namely has the functionality according to Hendriksen (1982) suggests
the usefulness of accounting theory is as follows:
a. Provide a frame of reference as a basis for assessing the accounting practices and
procedures.
b. Provide guidelines against practices and accounting procedures.
According to Ahmed Belkaoui, there is not a complete accounting theories in the
period. Therefore, the accounting must include all of the accounting literature that
provides a different approach to each other. Then the accounting entry in a theory with a
variety of research prove it.
Starling (1975) said that accounting is a science not an art, because art is not able
to resolve the accounting issues that exist. But Stamp (1981) and Baccouche (1992) with
various reasons expressly say that accounting is not a science. Even some of those
experts also said that accounting is not an art or science, but accounting is technology,
because according to their accounting is part of the practice, so if accounting is
considered Science then to be used to influence specific social must first be processed
into technology. (Littleton, 1974; Sudibyo, 1987; Gaffikin, Suwardjono 1991dan, 2005).
The definition of accounting as a science (science) is not actually based on the
criteria as a pure science, but simply because the accounting is a subject studied at
colleges or schools, as well as other subjects are also studied. Someone who is studying
accounting will then get the science of accounting. Understanding of science in
accounting is not the same as understanding science in pure sciences like physics,
chemistry, biology, psychology, sociology and others.
Understanding the theory contained in the theory of accounting according to
Hendriksen and Paton above is not actually appropriate, since it does not meet the trait
theory in pure science. The following are properties of the theory according to the
methodology in philosophy of science, according to Karl Popper (quoted from Bambang
Sudibyo)
a. The theory is hypothetical statements about the behavior of the theorized variables.
b. A fixed status as theory theory all denial-good empirical or logical negation not
managed to prove them wrong.
c. Unlikely Theory confirmed, otherwise the theory allows for proved wrong. Science is
not a collection of statements about the truth, but rather just a collection of statements
that have not been proven wrong.
 d. The purpose of the theory is twofold, namely: 1) to explain the behavior of the
theorized variables, and 2) to predict the behavior of the variables it in the future.
e. The theory is both descriptive and normative, not eksplanatif. The theory answers the
question "what" (what) and "why" (Rev.), not "what it should be" (what should be) and
"how to implement" (how to do).

1 2. Formulation of the problem

a. Whether a kuntansi is the theory or not?
b. What is the significance of the theory of accounting?

1 3. The purpose of the writing

a. Provide an explanation of the theory
b. Give a description of the accounting and the development of accounting
c. Provide an explanation on accounting theory
d. Provide an explanation of the significance of accounting theories
 CHAPTER II
DISCUSSION

2.1 Understanding the theory

Accounting keep developing along with the development of the community. The
history of the development of the thought of accounting (accounting thought) is divided
in three periods: the year 4000 BC – 1300 M; 1300 – 1850 M, and 1850 M until now.
Each period contributed to the science of accounting. The first accounting period is just
another form of record-keeping is very simple, that is to say is simply a form of recording
of anything that happened in the business world at the time. The second period was the
completion of the first period, known as the time of the birth of double-entry book
keeping. The last period on an awful lot of thought development of accounting is no
longer just a problem of the left – right credit debit, but have entered into the life of the
community. Technological developments have also resulted in changes to the science of
modern accounting, accounting users also vary from the merely understand accounting
as: 1) calculators calculate; 2) source of information in decision making; 3) get to
thinking how accounting applied in line with (or as a form of practice) religious
teachings.
Kerlinger (1973) stated that: "A theory is a set of interrelated constructs (concepts),
definitions, and propositions that present a systematic view of phenomena by specifying
relations among variables, with the purpose of explaning and predicting the phenomena."
 The theory is the concepts that relate to each other, which contain a systematic view of
phenomena. This definition contains three important concepts, among others:
1. The theory is such a proportion that consists and the konstrak has been defined broadly
in accordance with the relationship of the elements in the proportions are clearly.
2. The theory explains the relationship between variables so that a systematic view of
phenomena explained the variables can be clear.
3. The theory explains the phenomenon with specifying the variables are related.
According to Hedriksen (1992), the meaning of theory is a hypothesis, concept,
composition and pragmatic principles which form the framework of a general reference
to a field that is questionable. The theory is the source or upstream of a scientific
proposition, how to test them is through a research procedure with the assumption or
hypothesis-hoipotesis then tested or proven based on data collected (Tamburaka, h. E
Rustam; 1999). Creswell (2003) States that a theory is a set of related construction
(variable) that presents a systematic view of phenomena by specifying relations among
variables, with the goal of explaining natural phenomena.

2.1.1 establishment of Theory

Some theories establish a group of questions that are related to each other so that
gives meaning to a series of events. Theories can be tested, modified, or used as a guide
for research or as a basis for evaluation. The theory is obtained through two methods,
namely:
a. Deductive theories: starting with the test of a common idea, then perform actions
specific to draw a conclusion.
b. Inductive theories: emphasis on the observations in the past, and draw conclusions
based on observation. This method is often referred to as a conclusion of a special
retrieval approaches become common (going from the specific to the general)
Llewelyn (2003) in his journal tells us that there are five levels of theory to
qualitative empirical research
1. metaphor theorizes (with imagine and gather experiences);
2. finding theorizes (with sorting through experience);
3. concepts theorizes (with connecting structure and subject with the practice);
 4. theorizing settings (explain the phenomena);
5. theorizing structures (explain in a structural and a large scale of social reality) which is
also referred to as grand theorizing.
The five levels of this theory have to do tersediri with empirical issues. For
example, the understanding of reason, action, agency, social processes and social
production more can be understood through the levels of the most basic theory, namely ,
finding a metaphor, and conceptualization. While the understanding of the causes,
structures, and the relationship between the individual, the Organization and the
environment can be better understood through the fourth and fifth levels of theory. While
things like class, gender, power relations and distribution of resources can be far more
can be understood through the fifth level of theory.

2 2. Understanding Accounting
Understanding of accounting to date has yet to be defined in General can explain
what exactly is accounting. So it's still a lot of sense-sense presented by experts in text
books, articles, and in scientific journals. Public accounting professional organization,
namely the American Institute of Certified Public Accountants (AICPA) defines
accounting as follows:
"Accounting is the art of recording, classifying and summarizing in a significant
manner and terms of the transaction, money and events which are, in part at least, of
finacial character, and interpreting the result there of" meaning that accounting is the art
of recording, categorization, proper compaction and is expressed in units of currency,
transactions and events that are at least financially and the interpretation of its results.
American Acounting Association (AAA) in Soemarso (1996) defines accounting as the
process of identifying, measuring and reporting on economic information to allow for the
existence of the appraisals and a clear and unequivocal decision for those who use the
information.
Accounting is the system that measures business activities information, process
data into reports, and communicates the results to decision-makers (Horngren and
Harrison, 2007). Warren et al (2005) defines accounting in General and more concise i.e.
 accounting is defined as information systems that produce a report to the parties
concerned about the activity/economic performance and condition of the company.
A Weygandt, according to kuntansi et al (2007) it is said that accounting is a
system of information that identifies, records, and communicate economic events from an
organization to the users concerned.
Suwardjono (2012), ask the accounting definition of differentiated into two
aspects, namely as a set of knowledge and accounting as the process, functionality, or
practices. As a set of knowledge, accounting may be defined as a set of knowledge that
an engineering study of the provision of services in the form of financial information
kuantatif organizational units within an environment of certain countries and way of
delivery (reporting) of such information to the parties concerned to provide the basis of
decision-making in economic development ... Accounting as a process, function, or
practice is defined as the process of identification, confirmation, measurement,
recognition, classification, mergers, compaction, and the presentation of financial data
base that occurred from the events, transactions, activities or operations of an
organizational unit to produce the relevant information to the parties concerned.
2 3 theory of Accounting
2 . 3.1 Understanding of accounting Theory
Hendriksen and Van Breda (1992) defines accounting as follows: ". .. the logical
reasoning in the form of a set of broad principles (a set of broad priciples) that provide
general reference rerangka to evaluate the practice of accounting and provides guidance
in developing practices and new accounting procedures". This definition can be seen that
the "accounting" of accounting practices because the ultimate goal is to explain the
accounting practice runs and provide the basis for the development of the practice.
Macfoedz (1996) defines accounting as a concept, standard, mode, hypotheses and
related method that is extracted from the disciplines of philosophy of the Academy of
science and to explain and predict phenomena.
According to Soewardjono (2012) the sense of the theory of accounting depends
on whether the accounting is seen as a science or technology. When Accounting is seen
as Sains then Teori àkuntansi nature of Positif. Whereas when Akuntansi is seen as
Teknologi then Teori àkuntansi are Normatif.
 Taxonomy

Understanding Accounting Social studies: study of an engineering

A symptoms of a social/human system reporting

Understanding the theory of scientific explanation with logical Reasoning
Inductive scientific method of Accounting or with

empirical value judgment

or environment
The results of the theory or explanation R erangka Concept
As as scientific justification and
generalization policy

Understanding the theory of Accounting as a science as follows:

• A set of concepts, definitions, and propositions (statements) interconnected systematically
asked to explain and predict phenomena accounting.
• The phenomenon of the accounting concern is the decisions or conduct of parties (human)
with an interest in accounting.
• Use the diemulasi method of the scientific method in natural science with a target to test the
truth of the statements/explanations are scientifically.
• Does not produce the principle, method, or technique of accounting accounting policy
options.
Understanding the theory of Accounting as a technology as follows:
• Logical Reasoning informing practice of accounting.
• The process of reasoning to justify the appropriateness of certain accounting principles or
practices.
• Technology attached to an engineering financial reporting.
• An engineering didokumentasi Results in the form of a conceptual rerangka.
The basic assumption is the basis in the process of the overall theory of
accounting. Basic assumptions will be used to develop the concept of accounting. The
concept of a good accounting will result in a good standard. Next was revealed to be of
the standard methods, accounting practices should then refer to the standard are made.
Prekripsi accounting developed to solve special problems, the underlying theory is
also developed based on specific models. In General, the main function of accounting is
to provide rerangka the development of new ideas and help the selection process
accounting (Mathews & Perera, 1993). They further say that the theory has the following
characteristics: a) has a body of knowledge; b) internally consistent; c) explain and/or
predict phenomena; d) presents the ideal things; e) referring to direct the practice; and e)
discussed the issue and deliver solutions.
 Despite varying opinions of accounting theory has been heavily developed, but
none of the theory which is able to explain completely and thoroughly about what's called
the "theory" of accounting. Belkaoui (1993) also recognizes such opinions. He said "it
must be admitted that to date there is no comprehensive theory of the nature of
accounting" (p. 56). The theory that is now emerging from the wearing of a different
approach, instead of being generated from one single comprehensive theory. Committee
of the American Accounting Association (AAA, 1997:1-2) also stated the same thing i.e.
not a single accounting theory is able to meet the various needs of users, existing in the
literature is not the financial accounting accounting theory, but theory digambaran
collection correspond to the difference of the wearer.
 The role of theory in accounting is very different from the role of theory used in
science (natural science), where in science theory developed from empirical
observations. Accounting tend to be developed on the basis of a value judgment (value
judgement), influenced by the environmental factors place accounting is practiced. The
theory is then poured in the form of policy as the Foundation in the practice of
accounting.
The need for theory and practice can be seen from the following practices. In
contrast to the field of language, meteorology or chemical, accountants can change the
practice is relatively easier. Therefore, the issues facing accountants was knowing how to
practice accounting should be developed in the future. Sanctions with regard to the
implementation of accounting policies to be very important in understanding the field of
accounting, because practice makes it possible to modified to fit (fit) with the theory.
It is not thought by scientists from other fields is as good as any theory that is
generated, if the theory is inconsistent with empirical phenomena, then the theory will be
replaced by other theories that are more in tune with the phenomenon (Ijiri, 1971).
Accounting theory can be said to be a modern concept in comparison with other theories
such as mathematics or physical. Asasannya, that the accounting was developed from the
model-specific rather than developed systematically from a structured theory (Chambers,
1994).
The resulting accounting theory in the period of Pacioli until the early nineteenth
century. The various proposals about the theory appeared, but none that places
accounting in systematic ways that (Goldberg, 1949). Although accounting cannot be
described as pure science, accounting may be described as social science (social science).
As with any other social science, the concept of accounting is not based on the truth of a
universal nature. The accounting concept rooted in the value system of society in which
accounting is practiced (Glautier Underdown, and 1994).
So it is clear that the theory that has developed different viewpoints and sometimes
contradictory.

2 3.2. The perspective/Aspect/orientation of Accounting Theory

1. The targets or Goals
 The early development of the normative theory of accounting theory is defined as the
theory requires. A more classical approach focuses on the normative thought experienced its
height in the 1960s, but in the 1970s happened a shift in approach in accounting research.
The underlying reason for this shift is that the normative approach that has been successful
for a decade can not generate accounting theory who is ready to be used in the daily practice.
Design of accounting system resulting from normative research is in fact not used in
practice.
At the beginning of the development of accounting theory of normative theory defined
as the theory which requires and uses the policy value (value judgement) containing a
minimum of a plum is (Wolk & Tearney, 1997). The normative theory at first not using
formal investigative approach, the next development began a formal investigation into
structured approach is used, i.e. the deductive approach (starting from basic accounting to
proposition with a rational accounting principles are generated as the basis to develop the
techniques of accounting (Anis and,2003). In addition the development of accounting also
leads to positive accounting theory or a descriptive investigasinya has been more structured
by using the inductive approach based on a generalized conclusion based on based on the
results of observation and detailed measurements (Anis and,2003). Various positive or
descriptive theory evolved rapidly in accounting. Development of the theory leads to the
theory of positive (descriptive) is coupled with the changing focus of the theory of
accounting used by the Institute of accounting, for example, FASB emphasized the
usefulness in decision-making and are no longer focused on the postulate as seen on the
conceptual framework, published by the FASB began in 1979, beginning with the
formulation of the objectives of financial reporting (SFAC 1,1979 in Anis and,2003).
The Aspect Target Theory
The target of this aspect of the theory of accounting is accounting pembedan be
positive accounting theory (contains a statement about an event, action, or conduct such as is
in accordance with the facts on the basis of empirical) and normative (contains
representations and reasoning to judge whether something is good or bad or relevant or not
relevant in relation to particular social or economic development policy.
 A positive explanation directed to give an answer as to whether something is right or
wrong that statement on the basis of science. The normative explanation directed to support
or produce political policies so that the nature of policy making.
Landscape of semiotics in the theory of Accounting
The theory can be expressed in the form of a word or sign (sign). In the philosophy of
knowledge, the study of signs known as the semiology. Semiology is divided into three parts,
sintaktik (syntactics), semantics (semanics), and pragmatics (pragmatics or behavioral).
1.) Sintaktik (Syntactics)
Associated with the internal logic of the abstract world, a consistent internal logic
expressed in the form of a terstrukur statement can be: abstract statement with raw grammar
and mathematical logic statement. Statement in the form of the language terstrukur, for
example, "when demand for an item goes up, the price of the goods that would be likely to
join up". While the statements of mathematical logic or in the form of models for example:
Y = a + bX, or basic accounting equation A = K + E.
On the basis of the need to matematics rules or systactics rules, i.e. with attributes or
abstract symbols as follows:
(a) Y = a + bX
Description:
The dependent variable y =
a = constant number
b = the coefficient
X = independent variable
2). Semantics (Semantics)
Semantics in the image above is illustrated in lines that connected with square boxes,
this relationship has focused on events, objects or the actual symptoms occur with all its
characteristics.
Based on mathematical logic statement or models on the level of sintaktik., can be
connected with the empirical fact that exists in the real world (thereal world), by setting its
operational definition, as follows:
 (a) for example, predicts the number of sales (Y) in the coming year, based on
historical sales data are available in the company in the previous 5 years, then the
explanation is as follows:
Y = a + Bx
Description:
Y = Jumla h the predicted sales as the dependent varibel
a = A constant
b = Coefficient
X = Historical Data sales 5 years earlier, as a variable
independent or free/policy variables.
Constant or integer coefficient can be determined with the approach: (1) moment, (2)
least square (3) regression, depending on the characteristics of the available data and the
goals you want to achieve. When all the data already entered in the appropriate notation,
then it can be determined the amount of the sales prediction (Y), which can be used as the
basis for the determination of sales wisdom on the future.
3.) Pragmatics (Pragmatics or Behavioral)
Quite pragmatic aspects play a role in the research of social sciences, such as
sociology, psychology, anthropology, and accounting. Pragmatic relations, relating to the
behaviour of individuals or interest groups as a result of the existence of a particular
situation, or the availability of useful financial information to investment decision making. If
a hypothesis at the level of sintaktik done testing (test) validitasnya with the empirical fact,
results can be the same or different, could even be rejected.
So that it is easier to grasp the next example will be given in the application of
accounting as follows:
(1) the theory of Sintaktik
Sintaktik theory seeks to explain and predict how accounting accountant will react in
certain situations or how they reported certain events. Thus this theory relates to the
structure of the process of collecting data and financial reporting.
The interpretation of accounting on the basis of the theory of syntax can be described
as follows: input semantics in the system is transaction and Exchange recorded in journals
and ledgers of the company. Tranaksi are then manipulated (divided and in total) on the
basis of reason and the accounting assumptions kos historically. For example accountants
consider that inflation is not noteworthy and market value (fair value) of assets and debt is
almost ignored. Then use the concept of accountant-entry bookkeeping system (double
entry) and the accounting principles historically kos to calculate profit and loss statement
and balance sheet balances. The proposition or principle of individual verified financial
statements audited at any time, by means of checking the correctness of calculation and
manipulation. In this way, the accounting boarders historically has been practiced since long
time ago till now.
(2) the theory of Semantics (Interpretation)
Semantic theories related to the explanation of the phenomenon (objects or events) and
terms or symbols that represent it. So this theory provides an explanation of the operational
definition of accounting practices. The accounting structure, though it can be deduced
logically, not to be mean at all if the symbols or terms that describe an event or not related
measurements empirically with the phenomena of the real world. Thus, the theory with
regard to interpretation (semantics) is required to give meaning to the proposition of
accounting. In this way, the concept of the interpretation made by the same user defined
accounting accounting information.
(3) the theory of Pragmatics (behavior)
This theory seeks to explain the influence of accounting information against
behavioral decision making. So the theory of pragmatics is intended to measure and evaluate
the influence of Economics, psychology, and sociology of the wearer against alternatif
pelapornya dam media accounting procedures.
(3.1) a Pragmatic Approach-Descriptive
This method is the most universal and old, pragmatic usage is probably descriptive. On
the basis of this method of accounting, the behavior observed continuously with the aim to
replicate the procedure and principles of accounting. A process like this is an inductive
approach used to develop the theory of accounting.
There are some criticisms directed at such an approach, namely (1) there is no logical
assessment against the actions undertaken accountant. No reason to justify that the
accountant noted particular account in a way that should have been done, and there is no
analytical consideration of the quality of the Act or the accounts which he had made; (2) the
method doesn't allow to do the changes, because his approach is not pointed base. His
argument, accounting techniques never question or doubt because these techniques are
constantly used by supporters of pragmatics; and (3) the attention tends to focus on
behavior-the behavior of accountants, not on measuring attributes such as company assets,
debts, income and others.
On the basis of the fact that Sterling (1970) concludes that the pragmatic approach is
not suitable for the preparation of accounting theory. The conclusion is associated with the
normative theory of how accounting should be done, instead of a positive theory that
explains or predicts in the real world.

 Pragmatics-Psychological Approach
The second is a pragmatic approach to observe the reaction of the users of the financial
statements. Accountant accounting transactions according to manipulate the rules different
with sintaktik used to generate financial reports (e.g. the existence of inflation accounting
system which is different). The report then concluded by users.
Seen from the aspect of language, theoretical accounting rerangka can just focused on
one element of the theory: sintaktik (structure), semantics (interpretation) and pragmatics
(behavior). Nevertheless, Hendriksen and Van Breda (1992) argues that a full accounting
theory rerangka should have a three component theory above.
Approach To Reasoning
On the basis of the methods of reasoning are used, the accounting theory can be
formulated from a variety of different approaches, namely: a deductive); b) inductive;
ethical behaviour; c) sociology; d) economy; and elektik (Belkaoui, 1993). On pembahsan
this is more emphasized on dedukif and inductive approach by reason that this approach is
often used, compared with four other approaches.
1. The deductive Approach
The validity of the theory developed through this approach, depends very much on the
ability of researchers to identify and connect with the right accounting process of the various
components in a logical sequence. Error in determining the purpose of the procedure and the
ability to achieve those goals, will produce the wrong conclusion.
 The formulation of the theory of accounting based on the deductive approach, starting
from basic accounting to proposition produced a rational accounting principles as guidelines
and principles for developing accounting techniques.
In General, the measures used in formulating the theory of accounting are as follows:
(a) specify the financial reporting purposes; (b) select the accounting postulate which
corresponds to the economic conditions, politics and sociology, (c) determine the accounting
principles; and (e) develop techniques of accounting (Belkaoui, 1993).
The determination of the purpose of financial reporting is the most important thing
because different goals may require a different structure and will yield different principles.
When a goal has been set, some of the definitions and assumptions can be made.
Researchers then develop a logic terstrukur to achieve those goals, based on the definitions
and assumptions are made.
Advantage deductive approach is the ability to formulate a consistent theory of
structure, coordinated, and complete each stage runs logically. In this way, internal
consistency (internal consistency) between preposition can be achieved. Further it can be
said that each principle can be tested for truth and logic can be used to determine whether it
is used as a standard in evaluating the various accounting practices (Salmonson, 1969).
The weakness of the deductive approach based on specific goals and postulates the
possibility of wrong. When this happens, the resulting principle of automatic also sala. In
addition, the deductive approach also proved too often produces a theoretical principle that
they cannot be applied in practice. By implication, this approach is less tested in practice.
2. Inductive Approach
Inductive approach based on a generalized conclusions drawn based on the results of
observation and detailed measurements. Littleton (1953) that the principle of accounting to
be produced in inductive empirical testing by performing against the activities of
accounting. It is supported (Moonitz) said that the observations against the accounting data
appears to be more precise with the inductive approach. This opinion also supported by
Schrder (1960:648) stating that the formulation of the theory of accounting can be done in
inductive manner observing the financial data resulting from business transactions.
In conclusion, the inductive process involving the observation regarding the financial
data relating to the various business units. From the results of the observations, and then
performed a generalization and formulated appropriate accounting principles the relationship
that exists. The measures undertaken are as follows: (a) a record of all observations; (b)
analyse and classify the results of observation, so that it can formulate a range of equality
and inequality; (c) the results of the observation then generalized; and (d) testing against
generalization (Belkaoui, 1993).
The principal advantages of inductive approach is that this approach is based on
accounting theory formulation where freedom is not limited by the structure or model which
has been previously prepared/believed. So those who are observing have the freedom to
observe certain variables as long as it is relevant to tujuanyang will be achieved.
Disadvantages: (1) the observer is influenced by the ideas of the unconscious about the
types of relationships that are observed (the element of bias); and (2) a generalization of data
used in observation tends to vary from one company to another company. Consequently, the
conclusions made from the results of the generalization is most likely wrong just because the
data does not precisely observed reel.

2 3.3. Nature of Accounting Theory

According to Dr. Winwin Yadiati, S.E., M.Si, Ak (2007) nature of accounting theory
that is more descriptive (positive), that explain and predict variables-variables that theorized
what it is and prescriptive (normative), that describes what it should or describing a
particular variable in accordance with the rules and how it should be.
Accounting theory has several properties, including the following:
1. is a set of logical, interrelated and form a common framework
2. closely related to the preparation of the accounting policies
3. should include all the accounting literature that provides a different approach to
each other
4. should be able to give a description of the accounting practices, answer and
explain all phenomena which aspects influenced the application of a method in
accounting practices.
5. must be able to explain why companies are more likely to use the method FIFO
LiFO accounting dartipada in assessing the build-up
6. should be able to predict or even find symptoms of the unknown accounting
 7. very important in drawing up and verifying the accounting principles

2 3.4. Objectives and functions of accounting Theory

1. The purpose of accounting theory
The main purpose of accounting is to provide a set of logical prinsif, interlinked,
which menbentuk the framework of the common, and can be used as the reference for
assessing and developing accounting practices.
2. The function of accounting theory
Vernon Kam (1986) posited functions of accounting theory is as follows:
1. Be a handle for the constituent institutions accounting standards compiled by default.
2. Provide a frame of reference to solve the problem of accounting in case of the absence
of a formal standard.
3. Specify the limit in terms of doing "judgement" in the preparation of the financial
statements.
4. Increase understanding and confidence report readers against the information
presented the financial report.
5. Improve the quality can be compared.
Whereas Hendriksen (1982) suggests the usefulness of accounting theory is as
follows:
1. Provide a frame of reference as a basis for assessing the accounting practices and
procedures.
2. Provide guidelines to the practice and procedure of the new accounting
Function accounting (Hery: 2009:124) are:
1. As the framers of the agency guidelines for accounting standards
2. The Member's terms of reference in solving the problem of accounting there is no
official standard.
3. Improve the understanding and confidence of the reader to the information in
presented in the financial statements.
4. So that financial statements can be compared
5. Provide a frame of reference in judging procedures and accounting practices.
 According to the financial accounting standars board (FASB), accounting theory in
the need to:
1. Redirect constituent body of standards in setting accounting standards.
2. Provide a conceptual foundation for solving problems specific accounting treatment
when there is no standard that set them up.
3. Member limit discretion in compiling financial reports
4. Increase user confidence and understanding towards the relevance of financial
statements.
5. Enhance the appeal of the financial statements.

CHAPTER I II
SUMMARY

Based on the above discussion, it can be summed up as follows:

1. The development of accounting for these myriad changes adjust the requirements of the
relevant information for its users, but over time many paradigms that shape a new view in
giving judgment against the accounting information presented so it sometimes happens a
lot of the debate in the it's like whether accounting entered in a study of teori or not.
2. the definition of accounting theory is a long debate between academics and practitioners.
Experts define good accounting as an art activity, communication, services, science and
technology.
 3. In our opinion in order to produce output the re liabel then accounting is a study of the
theory but has areas in a study of the theory.
4. the role of theory in accounting is very different from the role of theory used in science
(natural science), where in science theory developed from empirical observations.
Accounting tend to be developed on the basis of a value judgment (value judgement),
influenced by the environmental factors place accounting is practiced. The theory is then
poured in the form of policy as the Foundation in the practice of accounting.
5. T eori accounting is highly important is studied because of the nature, purpose and function
of a very memepengaruhi accounting information generated through the process of
accounting in order to be relevant and reliability. As well as in accounting theory there
are several studies which are described therein as the recognition, measurement,
presentation and disclosure of the numbers – numbers of accounting in order to provide
information to users of financial statements are relevant and can be
dipertanggugjawabkan their validity.
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