Question 3 - 750 words

Historical cost accounting continues to be used to prepare financial accounts within annual reports and can be classified as a normative theory. Identify three criteria that can be used to evaluate a theory and apply these to historical cost accounting. Briefly explain why you think historical cost accounting continues to be used as a measurement basis within finanical reporting.

criteria

Description of three criteria which can be used to evaluate a theory. Use of these techniques to evaluate historical cost as a theory of accounting. Does the response demonstrate any critical evaluation of the issues surrounding historical cost accounting? Are the arguments supported through the use of external sources?

reference

Mathews, M. R., & Perera, M. H. B. (1996). The history of accounting to 1900, pp. 8- 18

Deegan (2014) Chapter 2, pp. 35-44 Miller, P., Hopper, T., & Laughlin, R. (1991). The new accounting history: An introduction'. Accounting Organizations and Society, 16(5/6), 395-403.