Inductive reasoning and deductive reasoning are useless in accounting

Introduction

Accounting subject has been offered in most of the universities all around the world with the sole aim of being better at what one does regarding the discipline. Recently, the Institute for accountants in America has recognized and established ways in which the accounting principles are highly considered in every institution. One of the main differences involving the deductive and the inductive arguments or reasoning in research is that the deductive reasoning is aimed and has to test the theory while that of inductive is mainly concerned with bringing in new theories derived from the data (Elo and Kyngäs, 2008 p56). For the deductive reasoning, the emphasis is based on the causality while that of the inductive is based on the exploration of any new ideas from a different angle from the research.

Efforts have been made regarding the profession where there have been numerous developments in making sure that the accounting procedures and the standards are increased to the best level possible. This is practically viewed as a chance of making the accounting profession a science other than being termed as a language. However, accounting cannot be stated as being related to science without the reasoning, argumentation and the justification of having the profession as a science (Smith, 2017 p30). The main theme that has been running in the already established field of profession is enabling the individuals responsible for setting standards to deduce the standards. In the context, there is need to consider the role played by both the inductive and the deductive reasoning to develop the accounting theory and the setting of the accounting standards.

Inductive reasoning and deductive reasoning

Inductive reasoning begins with the specification of the observations while making the conclusions just a generalization of the whole process. After there is a selection of the correct research documents, a generalized conclusion can be given based on the situation and the conditions. Every principle that is derived based on the reasoning of inductive is considered theoretically falsifiable. During the inductive process, the observer who is the researcher should be honest, not prejudiced or bias, with an open mind and record everything they observe. A scientific knowledge is formed through the laws and theories after the recording of the observations. The researchers also believe that there is a possibility for one to be able to generalize locally the observations into inclusive and general rules where the scientific options are ratified after verification.  At the conclusion of the research which is verified and constituted after the observations, the theories are hereby constructed (Elo and Kyngäs, 2008 p46). Inductive argument comprises of checking the pattern based on the observations and developing a theory for the pattern in order to come up with a hypothesis. During this research, no theory that is applied practically at the beginning and the researcher has the freedom to determine the next move for the research. At the early stages, no assumptions are made as the researcher knowledge of the research as it will be provided at the end of the research. The researcher uses observations to construct an abstract and to also describe the circumstances of the research.

One of the main advantages of having the inductive reasoning is the fact that there is no need for pre-fabricated model or framework. When the principles are being generalized, verification by way of the logical method must be done. Inductive reasoning towards science has been full of criticism with respect to the aspect of some of the methodologies and the credibility of the processes (Smith, 2017 p36). One of the main issues can be described as the researchers in some sense are being influenced by the kind of knowledge they have since it is limited considering the data to be collected.

Some of them term the inductive reasoning as being a principle of falsifiable since it is basically influenced by the observations.

Deductive argument includes the development of conclusions based on the types of theories which exists and therefore constructing a plan to have a detailed research on the developed conclusions. Deductive reasoning can be developed and explained as from the already provided assumptions in the theory. Some of the criticisms considering the deductive reasoning can be formulated to be on the basis of a misunderstanding. It is no right to expect a theory to be very practical is a wrong expectation and this is the reason as to why the reasoning does not make any sense.

In accounting research, the available databases have made it necessary and also easy for those doing the research to be able to explore the different relationships among the different types of data and therefore get general results by use of the statistical knowledge. Most of the research conducted in accounting uses the inductive reasoning and argumentation. Every researcher has the capacity and the understanding when it comes to performing research and choosing a particular topic for the research (Smith, 2017 p37). Deductive requires a developed knowledge and an understanding of the principles of accounting and any other related field such as finance, sociology, social values, economics and psychology to be able to conduct a research on the deductive reasoning strategy. This makes it possible and relevant to why most of the research is conducted using the inductive reasoning. Considering this choice, it is therefore very clear on why most of the researchers use the deductive and not the inductive method during their research. 

In accounting, the detailed analysis of the deductive and inductive reasoning is not useful. During distinguishing of both the deductive and inductive theories the conclusions are the same and this means that there are no two possible choices from the conclusions. The inductive and deductive have complementary processes used for the construction of the theories in a way that the induction is obtained before the deduction. During theory development, the researcher acts according to the perception of the inductive theory. For the research to make sense an observation is made, evidence obtained, and test the results to get an assumption. Every other person with interest in particular topics present a different version that is based on similar evidence and which eventually triggers a debate and a detailed research is carried out.       

The main objective of this idea is to have an understanding and an assumption that is common and acceptable to all the parties involved. Progress in this particular topic has been caused by the testing of the available assumptions. After having a possible explanation of the research, testing the assumptions commence and this indicates that if the assumptions are not at any fault, the output of the research can be reached upon.

When it comes to theorizing, reasoning is very important as a style of performing the accounting techniques. Developing any theory in the accounting field was done through the inductions. This means the ideas and the theories were formed through the observation method. Since the early 1920s, accounting theories were based on the observation of the way the accountants conducted themselves while at work. This similarly contradicts the method that forms the ideas based on the deductive approach that relies on the logic rather than observations. While using thee developing inductive reasoning after the observation of the way the accountants, the common related practice becomes an accounting conversion, for example, the conservatism doctrines. Researchers who developed theories using the inductive reasoning are always faced with criticism. During the late 70s, some of the researchers were still using the inductive approach but a different reasoning gained its ground making most of them to change their method of doing the research (Bryman and Bell, 2015 p44).  This particular approach was more concerned with the prescription of the specific practices in accounting which means that it was not developed from the already existing practices in accounting. This indicates that the theories for the financial accounting were never formed on the basis of observation but most of them were developed during the time when arguments on which each researcher though possible for the others to follow. Instead of having an inductive argument on the topics, deductive reasoning was applied bringing in the difference.

During this period, the rate of inflation was high in many of the countries and as a result, most of the involved researchers and theorists were doing everything possible to give out the historical costs of accounting. Many kinds of researches were done with an objective of having an explanation and a focus on the methodologies in accounting instead of having particular viewpoints. This was another important step that the accounting researchers took with the goal of having predictive researcher which was different from the prescriptive theories (Soiferman, 2010 p30). Financial accounting developments started in later 1930s and by that time they faced a lot of criticism which were based on the techniques developed. The first developments were used in costs, surplus, values, and capital computation. The development was however not a comprehensive one in the financial accounting since it was a sample review of the practices used in deductive reasoning. Such data assisted in making the conservatism and the historical cost in accounting principle which supported a concept of income that was comprehensive.   

Regarding the standards, the setters brought in the theory of accounting using the conceptual standard and framework. The expectations of the theory in accounting are to allow the standard setters to have them deduced.  In order to develop the accounting theory and the involved project of development, the conceptual framework needs to identify something that can be applied in order to deduce. Due to the global stock market problem in 1992 that brought in new challenges, the United States government inclined towards the increase of the financial markets regulations. 

The arguments against which the involved premises provide reasons supporting the probable truth of the action is in this case defined to be an act of the inductive reasoning.  The inductive argument in most cases uses the bottom to top approach to solving the issue while the deductive type of reasoning uses a particular top to done approach to solve any issue and do specific research according to the accounting techniques (Bryman and Bell, 2015 p42).

Considering the both the inductive and the deductive reasoning, each of these theories provides for the accounting theory which was both used in the past but due to the advancement and the change in technology and other vital details, they have loosed their meaning-making them not very useful in the accounting field. For example, the current accounting techniques require prior input in studies and way to approach an issue unlike the past when the research was considered on the basis of the accountant's behavior and practice.  The deductive reasoning basically starts with the small observations which determine the methodology and develop a theory through working on the related issues and therefore having a defined hypothesis. In many cases, such a theory is observed to have an influence on the data that is submitted since it indicates a high level of research but this is not very useful in the today society where computation and detailed research is done based on the availability and the market trend of the country.

Obtaining or even citing a conclusion even before having the research is not in line with the accounting techniques which require details and the final compilation is done as a result of the finding and not through general assumptions (Bryman and Bell, 2015 p42). Based on the deductive type of reasoning, the hypothesis obtained is used to gather evidence and various observations which are used to give out a final conclusion to the research. Such data is vital to making sure that each individual person has their views heard but at the same time, the content of the reasoning should not be based on just observation. There needs to be detailed research to provide the best results for the particular subject in question which is in accounting. The reasoning involved in the inductive arguments in accounting is termed to be not strong and there need to be supporting arguments regarding the subject which is used to draw a conclusion. The inductive argument is observed to be moving from the specific conclusions and choices to the general choices. This indicates the lack of proportional standards when it comes to providing the final data that will be based on a research.   

Conclusion

The deductive and inductive reasoning are particularly two kinds of explanations that are applied in the field of research and which are used to develop a hypothesis in order to have a conclusion based on the information which can be true. Inductive argument regards the subsequent events in order to make up a decision and a generalization (Soiferman, 2010 p26). On the other hand, deductive argument regards the general information provided as the base in order to arrive at a decision. Using this both criteria, it is evident that the meaning of the research and the reasons are already inconclusive and unreliable making them general methods of accounting which do not make any sense.     

 

 

 

 

 

 

 

 

 

 

 

 

 

 

References

Bryman, A. and Bell, E., 2015. Business research methods. Oxford University Press, USA.

Eisenhardt, K.M., Graebner, M.E. and Sonenshein, S., 2016. Grand challenges and inductive methods: Rigor without rigor mortis. Academy of Management Journal, 59(4), pp.1113-1123.

Elo, S. and Kyngäs, H., 2008. The qualitative content analysis process. Journal of advanced nursing, 62(1), pp.107-115.

MÜHL, J. K. (n.d.). Organizational Trust [recurso electrónico] Measurement, Impact, and the Role of Management Accountants.

Sekaran, U. and Bougie, R., 2016. Research methods for business: A skill building approach. John Wiley & Sons.

Smith, M., 2017. Research methods in accounting. Sage.

Soiferman, L.K., 2010. Compare and Contrast Inductive and Deductive Research Approaches. Online Submission.