The Importance of Learning Accounting Theory

Advice for the student:

As a future accountant, certainly, you will be required to conduct such activities as constructing and analyzing financial statements or making decisions. It is also undeniable that accounting practices underlying various activities are of great importance because as an accountant, you have to be aware of what should do and how to do with your accounting job so that to achieve better performances in those activities.

However, sometimes even the accounting practice itself is doubtful or unreasonable. So simply learning how to apply such accounting practices without questioning or critiquing the basis of practice is either irresponsible or dangerous. The accounting failures such as the fall of Enron and WorldCom and the recent financial crisis had indicated that the need for an accountant to understand thoroughly about the up-to-date accounting theory, without which it would be difficult to evaluate whether current accounting practices are true and suitable, to develop improved accounting practices where the current ones become no longer valid under the changed business situations and to defend the reputation of accounting when accounting practices become the" scapegoat" for the companies failures.

Moreover, accountants are powerful and influential in the business because many important decisions are made based on the information provided by them. For example, if the accounting information indicates that the firm is earning profits and having good debt condition and strong cash flows, it could be a sign for investors that the company is worth investing and vice versa. If the future accountant, at his student stage, does not critically learn to consider whether the accounting practices are logical or not, let alone he would think about it in his career. As a result, it could be potentially dangerous for the organization and even the accounting field.

Conversely,

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