The document discusses the inductive approach in accounting theory, which starts with observations to form generalizations and principles. It contrasts this with the deductive approach and highlights the advantages of being free from preconceived models, allowing for innovative thoughts based on observed patterns. The conclusion emphasizes that accounting theory development often incorporates both inductive and deductive reasoning to enhance understanding and explanatory power.

1. Accounting Theory
Inductive Approach in Accounting Theory
Supervisor: Arun Devapura W
Student: Kazim Ehsan
M.Com 1ST
Post Graduate Department of Commerce
Teresian College
119/10/2019

2. Content
 Introduction to Induction Approach
 Meaning and Definition of Induction Approach
 Inductive VS Deductive Approach
 Application of Induction Approach in Accounting Theory
 References

3. Introduction
Inductive reasoning, or induction approach , is one of the
two basic types of inference. An inference is a logical
connection between two statements: the first is called the
premise, while the second is called a conclusion and must
bear some kind of logical relationship to the premise.

4. Meaning & Definition…
 Meaning: Inductive approach, also known in inductive reasoning,
starts with the observations and theories are proposed towards the
end of the research process as a result of observations.
 Definition: Inductive Approach “involves the search for pattern from
observation and the development of explanations – theories – for
those patterns through series of hypotheses”

5. Inductive vs Deductive Approach

7. Inductive Approach in Accounting Theory
Applied to the accounting, the inductive approach begins with
observations about the financial information of business
enterprises and proceeds to construct generalizations and
principles of accounting from those observations on the basis of
recurring relationship.

8. Inductive Approach in Accounting…
The advantage of inductive approach is that it is not
necessarily considered by a preconceived model or structure.
The researchers are free to make any observation they may
deem relevant.
If the data have repetitive relationships, then some principles
can be formed and in some cases new thoughts can be
induced. If the observations are not influenced by current
principles and actions, more innovative thoughts can be
induced.

9. Conclusion
In developing accounting theory, inductive approach is used more
but most of the times accounting theories have been formed through
combining deductive and inductive arguments. Accounting theorists
generally begin with inductive reasoning and change their course
towards a deductive approach in order to improve the theory through
development of understanding and explanation power.

10. References:
1. https://research-methodology.net/research-methodology/research-
approach/inductive-approach-2/
2. The Role of Deductive and Inductive Reasoning in Accounting Research and
Standard Setting:
https://pdfs.semanticscholar.org/52f5/f38f2d481716e6e139b81115fa072f08d
e68.pdf
3. Deductive Versus Inductive Reasoning:
https://www.thoughtco.com/deductive-vs-inductive-reasoning-3026549

11. Thank You!