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8. Textbook Q1.35, p30: Do we really need financial accounting theory if all we

are interested in doing is developing accounting standards?

Absolutely yes! In developing accounting standards there will be many questions,

such as:

x

What will be the effect of the related information on different

stakeholder groups?

x

Will the new rules incorporated within the proposed accounting standard

provide more benefits to some groups relative to others?

x

Will organisations be likely to oppose the requirements, and why?

x

Does the proposed accounting standard provide the best approach for

accounting for the particular transaction or event?

x

What are the costs and benefits of the proposed accounting

requirements?

x

Is the accounting standard applicable across all countries?

To answer questions such as those provided above requires knowledge of various

theories of accounting.

Illustrate these points completely