Classification of Accounting Systems Essay Example | Topics and Well Written Essays - 1250 words

Classification of Accounting Systems - Essay Example(Shalin and Alan, 1999). The main differences between the two systems is in terms of reasoning and degree of complexity. The deductive approach shot considers a priori theory based on knowledge or beliefs of the classifier while the inductive approach infers the general from the particular. It is data driven, considers large number of countries and rules and generates categories by do use of statistcs.Mullers classification system as cited by Gray(1998) states that the deductive approach is based on four distinct approaches to accounting development in Hesperian nations with market oriented economic systems includingThis system was extended by Nobes who adopted a structural approach to the identification of accounting practices and assessed major features including the use of right accounting, the importance of tax rules, the strictness of application of historical costs, the making of replacement cost adjustments, the use of co nsolidation techniques the generous use of provisions, and uniformity between companies in application of rules. (Shalin and Alan, 1999).Although the deductive approach is very broad, it fails to take into consideration the effects of culture in the classification. There was also a failure in the methods employ to obtain the groupings. (Shalin and Alan, 1999 Gray, 1998).According to Roberts et al, the classification systems under the inductive approach are as followsUse of scathe water house dataDa costa et als studyNair and Franks StudyDArcys StucyHaving outlined the classification systems under the inductive approach, the paper will now give a more detail discussion of Nair and franks study.In the inductive approach statistical analysis were carried out by Nair and Frank in which they analysed accounting practices in forty four countries using data from price water house coopers. in the course of their study, a distinction was made between measuring stick and apocalypse pract ices. Five groups were identified in terms of measurement while seven groups were identified in terms of practice. An attempt was made to study the relationship of the groups with independent variables. there was no signicant relationship between disclosure practices and culture as well as between disclosure and economic variables. there was also no significant relationship