Accounting Theory

Accounting Theory sets out the ideas that sit underneath financial reporting: where accounting numbers come from, what they are meant to measure, and the competing views about how that should be done.

Rather than a list of rules, it treats accounting as a discipline with a body of theory behind it, the reasoning that standard-setters and regulators draw on when they decide how companies should report.

For anyone who wants to understand why financial statements look the way they do, it is foundational: the theory that any practical judgement about reported numbers ultimately rests on.