Accounting Policy

INTRODUCTION
This research critiques the

Accounting Policy

INTRODUCTION

This research critiques the

This research critiques the theoretical propositions advanced by Lauren KellyNewton in Accounting Policy Formula tion: The Role of Corporate Management,1 with respect to the underlying basis of the policy framework within which accounting theory is developed. In considering the basis for accounting policy formulation, KellyNewton emphasizes the changing demands of the environment within which accounting functions, and the political and social character of the accounting process, while developing a policymaking model for the profession.2 Underlying the development of a policy framework, however, is the proposition advanced by KellyNewton that the development of accounting policy and theory should be based upon positive philosophical imperatives, as opposed to normative philosophical imperatives.3

In this critique, KellyNewton’s propositions are considered within the context of normative and positive philosophical concepts. Further, the appropriateness is assessed for the

1L. KellyNewton, Accounting Policy Formulation: The Role of Corporate Management (Reading, Massachusetts: AddisonWesley Publishing Company, 1980), p. vx, 1163.

2Ibid., pp. v, viiix, 35, 2631, 106107, 141142, 158160.

1 2 resolution of accounting issues (1) on the basis of accounting policies with a positive, as opposed to a normative character generally, and (2), more specifically, through application of KellyNewton’s proposed policymaking model.

THE PURPOSE AND CHARACTER OF ACCOUNTING

Most accounting texts state that the purpose of financial accounting is to provide the financial information necessary for an organization to do its job, and for an organization to be able to accurately report its performance to investors, creditors, and governmental agencies.4 KellyNewton does not challenge this premise. He does, however, contend that the varying demands placed upon corporate managers, and the diversity of the needs of …

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