Abstract 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.

Abstract The article identifies the conditions for classifying accounting as a measurement discipline. A typical definition of measurement is "the assignment of numerals to objects or events according to rules." Defining measurement in this manner overcomes the objections mentioned above and insures that measures obtained via the various scales will be informative and consistent. A more satisfactory definition of measurement is the assignment of numerals to represent elements or a property of elements in a specified system on the basis of isomorphism or homomorphism existing between one or more empirical relational systems and one or more numerical relational systems. For example, if purchasing power, which is defined as the ability of an object to command other objects and services in exchanges, is shown to satisfy the conditions above, more precise definitions of accounting concepts could be formulated. Similarly, in choosing a depreciation method for a particular asset, the accountants would choose the method which is believed to parallel more closely the decline in the purchasing power of the asset. If accountants are not willing to choose an economic property for accounting measurement, which approximates extensiveness, and to assume that the property is extensive, they must abandon their attempts to improve and to explain accounting via measurement theory.