Accounting Conceptualization

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Individual’s ontological beliefs have greatly affected their conceptualization of issues concerning accounting on basis of misconception diverting their understanding of the main dimension of the accounting to something that can almost be stated as misguided. This is as a result of misconception interpretation concerning the accounting dimensions which are teaching, practice and research. These major frames of accounting are excessively objectively and mechanically analyzed, creating a distortion of the main theme concerning them. The question may arise. How does this happen to be? Or how is this so? Deep down in people’s minds is a rooted belief concerning the accounting argument or understanding that it is something that is not within us or within our vicinity, rather it is something that is found outside the world.

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According to Lukka (1990), accounting is reflected as ‘reality existing somewhere “out there”’. This is a belief that whatever a person does, he/she doesn’t see in it anything to do with the accounting connection in it. This has been termed as an act of linking the account with the realistic ontology. In the field of the market, different views concerning what it entails in the whole exchange process are there among the parties involved in the market. Both the producers and the demanders have their own views on what is the measure of the value when it comes to gaining profit in the market. For instance, according to the demand side, the evaluation of the value of the goods is based on the actor’s subjective preferences function who is dealing with the exchange in the market. That is, how these goods are handled by the supplier as a preparation to pass them to those who need them. For example, differentiation can be one of an act that can be used by the buyers to measure the value of the good, that is, take one commodity in two parts, if one part is presented in the market exactly the way it comes from the manufacturing, and the other is branded, labeled and maybe but into advertised; it will be considered as more valuable than the other but the fact is that both the products are very similar.

On the other hand, the producers have their own base in commodity value measurement. According to producers, what brings about the value of the good is the input impacted in the process of production in the form of labor. The expenses incurred in producing the commodity are all categorized as labor by the production side. This has forced the producers to go to the extent of considering the capital itself as labor. However, many traditional ontology beliefs have changed the appearance during the transformation process, for instance, any money put in the production process of a good regardless of what form is used in measuring how valuable is the output. For example, in a production process, any funds from capital, labor, transportation, consultation, among others are a standard measure of goods value in the determination of the profit. This according to Lukka (1990) makes the profit to have an interpretation of being seen as “a social surplus having links with social orientation and exploitation.”

Critical accounting research is involved and determined to change human views and the picture they hold, concerning the account and to dispatch their beliefs from what has been instilled in them by other people. Lukka (1990) quotes that, “The theme here is to bring to openness the link and connection between the real accounting and the various power structures in organization and society.” The main issue to address is those that are involved in competing interests and the impact of the whole accounts. Some ideas that have contributed to the attack of the issues included in the neo-classical marginalist economics, as well as positive accounting research, are like, for instance, the idea that some other important aspects do immerge from other fields such as classical political economy which need to be given positive consideration.

In addition, the accounting research claim for its value-freeness has been another field that has to raise conflicting views. Despite all these hard-worked issues, the main target of the school has not yet been obtained because other sub-fields have been excelling on grounds that are their call. For instance, the issue of materialism has brought a major dividing source because some of the sub-schools do base their whole argument on materialistic perspective while others have totally nothing to do with the materialistic issue. As a result of these different views on materialism, it has been noted that other ontological alternatives have not been given a good hand as they are supposed to. As a result, the problem of ontology in accounting has been categorized into two fields in form of scale approach, they include those that are “extremely realism” that is those that are based on the observable reality; and those that are “extremely idealism” meaning those that are based on what human imagination accounting should be or is like.

This field has its benefit in that it dispatches objective beliefs in people and brings out what accounting entails. In addition, it has imposed an idea of “social constructiveness” on which the proceeding in nowadays market is often placed. It also brings about the aspect of visibility something which is a connection to all and everything that is entailed in accounts, including aspects that are disregarded or considered as non-existing, such as the financial phenomenon in organizations and society. Moreover, the research has given a raise on the ground from a time when there was nothing to work with to where the world is now. That is, about 200 years ago, there were no categories or frames of accounting where data and entities could be placed on.

According to Chua (1986), everything is occurring simultaneously regardless of whether it is in its actual state or not or in the process of becoming either, which he says is a human being’s characteristic. In addition, the system of power and domination in ruling has hindered their potential, causing people to become alienated from self-realization. Any entity that exists isolated from the environment is considered incomplete, and this gives rise to interactive relationship between the individual in which enable them to complement each other. Apart from this social reality giving individuals a framework to act on they are as well “the actions that create legality”.

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Classical Approach represented the starters period in the development of the theories of accounting which immerged in the early 1900s. It involved two schools of thought, that is the normative deductive; and inductive. The normative deductive is based on neo-classical marginalist economics intended in measuring the “true income” of the firm. On the other hand, normative inductive is closely associated with the already existing financial accounting practice. Hence “realized” transactions are only used to measure the profit based on historical cost.

The Decision Usefulness Approach put the user in mind and put forward his benefits of accounting information. It involves the expansion of its information to others like reception and enables them to use that information. Further, it considers the coalition of the interest groups in terms of borrowing or adopting coalition theory, that is, profit measurement and acquiring and using information. It is the action that seeks for the search of the “conditional truth” by moving away from research “absolute truth” in a classical approach.

Information Economics is an approach that uses the principle of economics to inform on production directly, considering that the information is not a free commodity and that the relationship between the costs and benefits that the user will be derived from this information is the one that will determine the structure and the operation of an optimum information system. This approach has been based on normative-deductive models with the decision-maker being rational and applying the probability of condition.

In conclusion, according to the argument presented by Chua (1986), it is factual that how people view accounting issues is contrary to what it is supposed to be. Despite this, Chua failed to justify his stand on various fields and on some issues. For instance, the issue of materialism is of great concern, since it offers a means to an end although people have different opinions from the two sub-school which will not solve the current confusion. Also categorizing the ontological problem in two fields does not solve the original problem, which the researcher’s purpose was initially to restore, that is, the reality as projected by human imagination concerning the accounting was to be diverted into reality as per concrete fact which the author fails to address appropriately. Ontological alternatives are as well ignored or are not considered as more important than other fields. For instance, the classical political economy has been left out and it has a significant impact on accounting. Another important issue is that no matter how people view what accounting tries to impose as a new view in people will not be automatically acquired without formal education being introduced to them.

Reference list

Chua, WF 1986, ‘Radical development in accounting thought’, The accounting review, Vol LXI, No.4. pp. 601-632.

Lukka, K 1990, ‘Ontology and accounting: The concept of profit’, Critical perspectives on accounting, Pp. 239-261.

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