ACCOUNTING THEORY: FORMULATION AND DIVERSITIES IN THE USE OF ACCOUNTING INFORMATION
Abstract
This paper assessed the approaches to the formulation of accounting theory, the reasons why there are different accounting theory and the areas of diversities in the use of accounting information. The study adopted expository research design by reviewing existing literatures. This study used secondary data obtained from the internet by reviewing 45 literatures that are related to accounting theory formulation and diversities in the use of accounting information. Results of this study after the extensive review of the concept of accounting theory formulation discovered that in accounting; practice comes before theory. The findings also discovered that the reason why there are different accounting theories is that each theory were formulated to meet the needs of different users of accounting information and also because of the absence of generally acceptable accounting theories. This study concluded that there is no universal accepted accounting theory and that accounting has several conflicting theories that has led to inconsistency in accounting practices. The study recommends that accounting bodies and standard setters should develop a universal accounting theory that will meet every users of accounting information needs. The theory should be developed in such a way that it will be difficult to influence, this will ensure globally acceptability of the theory.
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