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Structure of
Accounting Theory
Accounting Theory
Elements of
Accounting
Theory
Postulates Techniques
Objectives Principles
Accounting
Postulates
• The nature of the entity and the interest in the entity may classiefied
according to :
• the proprietary theory,
• the entity theory,
• the residual theory,
• the enterprise theory and
• the fund theory.
The Propriety Theory
• The primary objective of this theory is to determine the propreitor’s net worth (Wealth).
• Balance sheet oriented.
• According to this theory, the entity is regarded as the ‘’the agent, representative or arrangement
through which the individual entrepreneurs or shareholders operate.’’
• the proprietary theory is also applied to corporations in this surplus in this respect.
The Entity Theory
.
Materiality Principle