What is Accounting Theory? A Comprehensive Guide
Accounting theory refers to the set of principles, concepts, and frameworks that guide the practice of financial reporting and accounting. It provides a systematic approach to recording, analyzing, and interpreting financial information. The purpose of accounting theory is to ensure consistency, reliability, and accuracy in financial statements. It helps businesses and organizations make informed decisions by establishing guidelines that align with regulatory standards. Accounting theory evolves over time to accommodate changes in economic conditions, business environments, and financial regulations. It plays a crucial role in maintaining transparency and accountability in financial reporting.
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