Essay: The Decision Usefulness Theory

Sample Essay

Accounting under ideal and non ideal conditions theory presents the level of assurance in methods, procedures and policies implemented in an organisation. The financial statements are presented in a realistic context under idealistic conditions whereas in non ideal conditions accountants use assumptions to arrive at various values presented on financial statements (Mattessich 2007). The study of this theory is important as accountants would be able to grasp the idealistic conditions under which financial statements should be prepared.

The decision usefulness theory presents the decision making patterns and characteristics of users of financial statements. The theory explains how principles, theories and concepts of accounting are applied to make useful decisions under various circumstances (Stamp, Mumford and Peasnell 1993). The importance of this theory cannot be overlooked as accountants acquire substantial knowledge of applying concepts and principles which is necessary for making useful decisions.

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