Tutorial 10 (ATP)
Tutorial 10 (ATP)
The conclusions reached are probable, The conclusions reached are certain,
reasonable, plausible, believable inevitable, inescapable
Differences between Induction and
Deduction Reasoning
INDUCTIVE REASONING DEDUCTIVE REASONING
Observation Theory
Pattern Hypothesis
Theory Confirmation
Question 1 (b)
Give an example each on accounting theories developed by induction
and deduction.
Example of theory
developed by induction.
Inductive theory developed by Grady in
1965, who undertook research
commissioned by the American Institute of
Certified Public Accountants (AICPA). The
research paper formed the basis o APB
Statement No. 4 ‘Basic Concepts and
Accounting Principles Underlying the
Financial Statements of Business
Enterprises’, which reflects the generally
accepted accounting principles at that time.
APB Statement No. 4
01 02 03
facts based on the use practice the theorist’s opinion
of logic of the theorist
and prescribed what
people should do.
Normative theories
Normative theories are based on the deductive approach and seek to
develop a basis for informing people as to what they should do.
The example each on
accounting theories
developed by deduction