University of London

Small Navigation Menu

Primary Menu

Accounting Theory AC3193

This course is designed to address the contemporary issues in both financial and management accounting in the context of theoretical and empirical development.

Prerequisites/ Exclusions

If taken as part of a BSc degree, the following course(s) must be passed before this course may be attempted:

  • AC2091 Financial Reporting
  • AC2097 Management Accounting

Topics covered

This subject guide is divided into two parts. Part 1 – blocks 1-10, Part 2 - blocks 11-20:

  • Block 1 provides an introduction to accounting theory.
  • Blocks 2 to 5 focuses on normative (prescriptive) economistic theories of accounting, such as current entry and exit value systems, deprival value and Hicks’ income.
  • Blocks 6 and 7 describes positive (descriptive) economistic theories of accounting that are based on archival databases, such as the Efficient Markets Hypothesis and Watts and Zimmerman’s Positive Accounting.
  • Block 8 discusses positive (descriptive) socio-political/social theories of accounting.
  • Block 9 covers critical approaches in accounting.
  • Block 10 deals with the regulation of accounting.
  • Block 11 introduces management control, identifying results control, action, personnel and cultural Controls.
  • Block 12 discusses Control system tightness and costs and designing and evaluating Management Control Systems.
  • Block 13 focuses on Financial Responsibility Centres.
  • Block 14 reviews Planning and Budgeting including variations and problems
  • Block 15 looks at issues relating to incentive compensation.
  • Block 16 considers the effects of Financial Performance Measures.
  • Block 17 incorporates combinations of measures and other remedies and using financial results in the presence of uncontrollable factors.
  • Block 18 considers the related ethical issues of management control.
  • Block 19 look at the effects of environmental uncertainty, organisational structure and Multi-nationality on Management Control Systems.
  • Block 20 considers Management Control in non-profit organisations.

Learning outcomes

If you complete the course successfully, you should be able to:

  • critically assess the impact of positive and normative accounting theories and their applications in dealing with complex financial accounting issues such as alternative accounting conventions, conceptual framework and economic income approach.
  • discuss the different approaches in regulating financial accounting information
  • discuss the demand and implications of financial information in capital market research
  • evaluate the applications of sociological and organisational approaches to the study of accounting
  • evaluate issues arising from management control in its organisational context
  • discuss various approaches to performance measurement and control in various types of organisations, and devise and evaluate indicators of performance
  • discuss contingency theory and its impacts on management control practices in organisations
  • discuss the ethical issues of using management control methods and its use in non- profit organisations

    Assessment

    Unseen written exam (3 hrs 15).

    Essential reading

    • Alexander, D., A. Britton, A. Jorissen, M. Hoogendoorn and C.V. Mourik. International financial reporting and analysis. (Andover: Cengage Learning, 2017) 7th edition [ISBN 9781473725454]
    • Merchant & Van der Stede, Management Control Systems: Performance Measurement, Evaluation and Incentives, FT/Prentice Hall (2017) [ISBN 9781292181875].

    Course information sheets

    Download the course information sheets from the LSE website.