Transcription of An Introduction to Accounting Theory
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1 Accounting is frequently viewed as a dry, cold, and highly analytical discipline with very precise answers that are either correct or incor-rect. Nothing could be further from the truth. To take a simple example, assume two enterprises that are otherwise similar are valuing their inventory and cost of goods sold using different Accounting methods. Firm A selects LIFO (last-in, first-out) and Firm B selects FIFO (first-in, first-out), giving totally different but equally correct , one might say that a choice among inventory methods is merely an Accounting construct : the kinds of games accountants play that are solely of interest to them but have nothing to do with the real world.
definitions, principles, and concepts should be; thus, accounting theory is never a final and finished product. Dialogue always continues, particularly as new issues and problems arise. As the term is used here, it applies to finan-cial accounting and not to managerial or governmental accounting. Financial accounting
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