Accounting Science

The definition of science includes
attaining knowledge through
study, practice, investigation, and
careful observation. This includes
having gained knowledge of
general truths about the laws of
operations, especially through
tested means as in using the
scientific method. Similarly, the
definition of accounting includes
observation, investigation, and
identification through testing and
collection methods to draw
conclusions about the data.
Extensive study and training are
necessary before the
professional is able to formulate
a hypothesis in both science and
accounting. For both the fields
of science and accounting, the
professional makes conclusions
and judgments after careful
investigation, documentation,
and research. In accounting, the
book entries are the accepted
method of recording and
classifying data in logical and
permanent form.
Identify and Measure
A scientist will identify and
research a topic, measure, and
record results until everyone is
satisfied with the accuracy of the
data. In the same way,
accountants identify and
measure data. Accounting
transactions are identified and
recorded using a double-entry
bookkeeping accounting system
that includes a set of accounts.
When an auditor is testing for
accuracy of accounting practices,
numerous tests and
measurements are done until
every one is satisfied that the
results are accurate. Because the
measurements in accounting
involve subjective judgments by
the accountant about business
liabilities and asset values, the
process is more like a scientific
approach to data interpretation.
Communication
In order for accounting
information to be usable by the
receiver, it needs to be
communicated in ways that are
easily understandable and
relevant to those receiving the
information. Of course, these
principles hold true with any
scientific research. It must be
relevant and understandable or
it is useless. In accounting, the
accepted methods of
communicating financial data in
an understandable and
summarized format include
preparing financial reports such
as the general ledger, balance
sheets, income statements, and
cash flow statements. Accepted
measurements are used to
analyze the data that these
forms contain and accountants
study the formulas to interpret
the data. Some examples are
inventory turnover ratios, Debt-
to-Equity Ratio, and Operating
Margin. Reliance on the data
collected and the analysis tools
reduce the uncertainty in those
who must make the decisions on
how to proceed with the
information