Why Can Accounting Not Become A Science Like Physics?
· Presentation
& preparation of this topic have been made based on the review article of
Edward Stamp, who accepted Professor Robert R. Sterling’s challenge on “Accounting can solve its
problem by becoming a science like Physics”.
· This review
article was published in the journal of ‘ABACUS’ in its ‘Spring 1981’ issue; by
the “Accounting & Finance Foundation” of “University of Sydney”.
· In his review,
Edward Stamp proved that there is no prospect that Accounting can ever parallel
the development of Physics, because the nature of physical reality is totally
different from the reality with which accountants must deal.
Throughout the
presentation we will cover some important aspects like as:
·
The concept of
Science, its nature & characteristics.
·
Physics as a
Science.
·
The concept of
Accounting.
·
Is Accounting
a science or others? (A comparative discussion among Law, Mathematics &
Accounting)
·
A comparative
discussion between Physical Science & accounting.
Science: what
is it?
·
Generally, Science is a body of systematic knowledge.
·
Science is a
system of knowledge. A system consists of a number of things which are related
together in a particular way so as to serve a particular purpose. The proper
understanding & explanation of facts lead to the development of Science.
·
In Science,
there is an inherent tendency of knowing & understanding facts.
·
In Science, a
meaningful relationship between facts is established through rational
explanation.
Science is of 2 types:
I.
Deductive or
formal, &
II.
Inductive or
empirical.
(i)
In a Deductive
process, the system is developed through definitions, axioms & inferences
in which conclusions are developed from a deductive method of reasoning. Pure
mathematics is an example of formal science.
(ii)
In Inductive
process, the system is developed based on experience. i.e. knowledge is
obtained by observation. Facts about the human life that is social-sciences,
like Economics, is based on observation.
Science: Its
nature & characteristics
·
Science is a
system. It’s a system where so many facts are related together.
·
Science is
empirical in nature. In science, knowledge is obtained by observations.
·
Science is
based on critical discrimination.
·
Science
consists of general explanations & principles.
·
Science is
self-correcting in nature. Whenever new facts are found, the old conclusions
are revised; if the new facts demand so.
·
Science
formulates laws. Facts are explained with references to laws. Laws are
explained by constructing theories which relate the laws to a coherent system.
·
Another
feature of science is its function of prediction. On the basis of laws, science
can predict the happening of certain events.
Physics as a Science
·
Physics is the
general analysis of nature,
conducted in order to understand how the universe behaves. A
physicist makes objective and indicative measures of natural phenomena, or
states of nature, that are relevant to the problem he or she wishes to solve.
Physicists use the scientific
method to test the validity of a physical theory, using a
methodological approach.
·
So we can say
that, physics is a natural
science that involves the study of matter and its motion through space-time, as well as all
applicable concepts, such as energy
and force. Scientific
computation is an integral part of physics and the field of computational
physics is an active area of research.
·
Physics is
ultimately concerned with descriptions of the material world, it tastes its
theories by comparing the predictions of its theories with data procured from
observations and experimentation to arrive at a statistical estimate of the
true length with a high degree of precision.
·
Physics is
also intimately related to many other sciences, as well as applied fields like
engineering and medicine. Physics is often said to be the “fundamental
science”, because each of the other disciplines (Chemistry, biology etc.) deal
with particular types of material systems that obey the law of physics.
·
The facts and
mechanisms of physics are open to discovery but they are independent of
human beings, and the physicist deals with a world which would still exist
without any scientists. The world of physics is concerned with universal
statements which are entirely generally with respect to both space and time.
·
The laws of
physics operate because of some unknown, unseen and nonhuman agency that we
cannot begin to understand but which many people regard as divine. Physical
laws are self-enforcing. We discover them, but we cannot make them.
So in short we can conclude that, because of some natures that are common
to both physics and science such as observation, experiment, explanation,
empirical nature, laws and theory physics can be referred as science.
Nature
of Accounting
·
Accounting is
the identification, measurement and communication of financial information
about economic entities to interested persons,
Arose from the need to communicate financial information.
Arose from the need to communicate financial information.
·
A more
comprehensive definition of accounting is provided by Ansari, Bell, Klammer,
Lawrence who state that it consists of 4 key ideas:
§ It is by nature a measurement process;
§ Its scope includes financial and operational
information;
§ Its purpose is to assist the organization in
reaching its strategic objectives; and
§ Its attributes are to enhance the understanding of
the measured phenomenon, and provide information for decision making, and therefore encourages action and supports
and creates shared values, beliefs and mindsets.
·
As an
information science, accounting generates information on past events (i.e.,
what has happened) and generates predictions of possible future outcomes (i.e.
Evaluations of available alternatives
for decision making purposes). The accounting measurement systems consists
of three independent units:
§ The physical good/service unit – The want of
satisfaction item.
§ The money unit – The measuring device and exchange
mechanism.
§ The Time unit – The interval during which events
occur.
·
Accounting is
comprised of general principles pertaining to the environment from which it
draws and service. It is an administrative information science. It is concerned
with events and measures relevant to efficient organizational control and
planning.
Some Other Issues
related to Accounting According To the Journal
·
Accounting deals
with a system which is a human creation, designed to human need, and which must
be useful. As it deals with a system created by people, hence its fundamental
characteristics are constantly changing and evolving.
·
Accountants
employ concepts such as “truth” and “fairness” that are value-laden, although
it is generally thought that neutrality between the various interested parties
is an important objective of external financial reporting.
·
Accountability
measures are not additive because when all the assets of a firm are valued on
the same basis (such as net realizable value) the sum of the individual values
seldom if ever equals the net realizable value of the group as a whole.
·
Thank You All
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