Accounting Theory Notes
Subject Overview
Accounting Theory covers the conceptual foundations of accounting — GAAP, accounting policy for depreciation and inventories, lease/
Subject at a glance
4
Units
28
Topics
4
Credits
4
Infographics
Unit-wise Syllabus
4 units — open any unit for detailed topic-wise notes, diagrams and important exam questions
- History and evolution of accounting thought
- approaches to accounting theory
- financial vs cost vs management accounting
- concepts of income/revenue/expense/gains/losses
- single vs double entry systems
- GAAP nature/scope/merits/limitations
- accounting policy for depreciation and inventories
Deductive
From objectives and postulates to rules
Inductive
From observed practice to principles
Ethical
Fairness and truth
Sociological
Impact on society
Economic
Impact on economic welfare
Decision-usefulness
What users need
Study guide
This unit covers the evolution of accounting thought, approaches to accounting theory, differences between financial, cost and management accounting, income, revenue, expenses, gains and losses, single and double entry, GAAP and accounting policy for depreciation and inventories. Understand why accounting theory matters for choosing between acceptable methods.
- Accounting for leases and hire purchase and their standards
- accounting for derivatives
- accounting for price-level changes
- human resource accounting
- social accounting
- forensic accounting
- environmental accounting
- accounting for cryptocurrencies
Human resource accounting
Valuing people as assets
Social accounting
Social costs and benefits
Environmental accounting
Environmental costs and liabilities
Forensic accounting
Fraud investigation
Price-level accounting
Adjusts for inflation
Crypto-asset accounting
Treatment of digital assets
Study guide
You study leases and hire purchase, derivatives, price-level changes and contemporary areas: human resource, social, forensic and environmental accounting and accounting for cryptocurrencies. Read about how companies report ESG and sustainability.
- Accounting for amalgamation — methods and standards
- holding company accounts — meaning and treatment
- introduction to accounting standards and guidance notes
- comparative study of International Accounting Standards
- Indian Accounting Standards and US GAAP
- harmonization of accounting practices
Ind AS
Converged with IFRS, Indian carve-outs
MCA, on ICAI advice
IFRS
Principles-based global standards
IASB
US GAAP
More rules-based
FASB
Study guide
You study amalgamation methods and standards, holding company accounts, accounting standards and guidance notes, and a comparison of International Accounting Standards, Indian Accounting Standards and US GAAP, with harmonisation. Know the main differences between Ind AS and IFRS.
- Content
- scope and issues in financial reporting
- interim reporting
- segment reporting
- corporate social reporting
- harmonization of financial reporting
- recent trends in financial reporting practices
Annual reports
Full-year statements
Interim reporting
Quarterly or half-yearly
Segment reporting
By business or geography
Corporate social reporting
CSR and ESG disclosures
Integrated reporting
Financial plus non-financial value
Study guide
You study financial reporting: content, scope and issues, interim and segment reporting, corporate social reporting, harmonisation and recent trends. Read a listed company's annual report to see these in practice.
Why Accounting Theory Matters
A solid understanding of accounting theory and standards underpins careers in audit, financial reporting and academics and is essential for CA, ACCA and UGC-NET Commerce.
How to Prepare for Accounting Theory
- Learn the key accounting standards and what each covers.
- Read a real annual report and identify the notes and policies.
- Compare Ind AS, IFRS and US GAAP in a table.
Accounting Theory: Frequently Asked Questions
What is the difference between Ind AS and IFRS?
Ind AS are India's accounting standards converged with IFRS but with some carve-outs and modifications to suit Indian conditions.
What is segment reporting?
Segment reporting discloses a company's financial information for each major business or geographic segment.