Descriptive Pragmatic Approach In Accounting

Accounting Theory can be define more clearly if we define the two words separately and link it at the end. As quoted below “…the process of identifying, measuring and communicating economic information to permit informed judgement and decisions by users of the information.” (Smith, 1990) Accounting is the practical work of an accountant; recording of information from source documents, analysing it and making a report useful to stakeholders to help them make good decision. And theory is the explaining and predicting why practical accounting practices of book keeping procedures. It is the idea set up to guide the action taking place. Accounting is a profession of collecting data in source documents, analysing it into a report and presenting it

First one is the Pragmatic approach is further categorized into two approach. Descriptive pragmatic approach, is the oldest and method of accounting theory construction that is used worldwide. Theories are developed from how accountants act in certain situation. Which are then tested to see if accountants act the way the theory suggests. On the other hand Psychological pragmatic approach depends on the reactions they observe from the accountants’ outputs or financial report. The reactions are taken as evidence that the outputs or financial reports are useful and contain relevant information.
Secondly is the syntactic and semantic theories; semantic inputs are transactions, journals, vouchers and ledgers. These inputs are then manipulated on the basis of assumptions of historical cost accounting. It is like a linking relationship of theory to object in the real world, thus one can find it more realistic and reasonable. An example is the accounting equation A=L+E is theory, but when put in the real world the equation looks for realistic. The output can be syntactically accurate but will have no value if it lacks semantic