The article focuses on methodology of financial accounting. In recent years, a number of accounting theoreticians have begun to attempt to apply the methodology of theory construction and confirmation in sciences to financial accounting. The impetus for these efforts probably was the desire to develop a theory or theories of accounting, which has the explanatory, the predictive and the descriptive powers of theories of sciences. In any case, these pioneering efforts have identified an inextricable link between theory construction and confirmation and measurement theory. The purpose of the paper is to appraise the validity of the ratio-scale view. The next section of the paper contains an overview of the analysis and the third subdivision of the paper provides a detailed analysis of the logic of this viewpoint. The final section provides conclusions concerning the future development of accounting theory, which are based on the examination of the ratio-scale view. The importance of the connection between theory construction and confirmation and measurement theory implies that accountants need to explore thoroughly the relationship between the numerical assignments of extant accounting systems and requirements of measurement theory.

The article presents a comment on the interpretation of API. In "Interpreting the API," Ronald M. Marshall concludes that API does not always provide a proper measure of either the private value of accounting data or the association between unexpected accounting signals and unexpected market returns. In addition, Marshall concludes that an alternative formulation of API always produces measures of these attributes, which are at least as good as those obtained via API. On the basis of these conclusions, Marshall argues that API constitutes the more appropriate tool for use in accounting research. Authors do not disagree with Marshall's conclusions from a conceptual viewpoint, but they do question the desirability of using API in accounting research because of its inherent subjectivity and costliness in terms of time. Since API does not possess these defects, authors believe that it constitutes the better research technique when, conceptually speaking, it can be expected to yield results, which are equivalent to those that would be produced using API. One objective of the paper is to identify an important sufficient condition, under which the two API will produce equivalent results.