Introduction to Accounting Theory

QUESTION 5

Which of the following are valid arguments and which are true predictions? Comment on the syntactic, semantic and pragmatic relations with respect to each argument.

1. Accounting reports should indicate a firm’s to meet its debts.

The only way to indicate a firm’s ability to pay its debts is to report assets at their selling prices.

The selling prices of the firm’s assets indicate the firm’s ability to meets its debts.

Accounting reports should report the selling prices of assets.

Answer:

Since this is the syntactically relation so the argument is valid because the premises and conclusion are true. Syntactic is refers to a flow of logic, not to the accuracy of an argument’s representation of the real world. So the firm decided to report assets at their selling price to indicate the firm’s ability to meet its debts was the decision made among their accountant theorists but not to follow to the real words that using GAAP principle, historical cost.

Semantics is concerns the relationship of symbols, words, terms or concepts with real-world objects, events or functions and is seen to make a theory realistic. The semantic accuracy of a premise needs to be established by reference to real world descriptive accuracy. There were clear definitions or terms have been used that correspond to generally understand to the real world meanings. Accounting reports should indicate a firm’s to meet its debts.

Pragmatic relations are the relevance to human reactions or behaviour. There IS the argument takes on a prescriptive view of what accounting reports should communicate.

1. All asset accounts have debit balances.

The accounts payable account is an asset account.

The accounts payable account has a debit balance.

Answer:

Since this is the syntactically relation so the argument is valid because this argument is follows a logical and clear reasoning but there is an untrue hypothesis. This is because the account payable account is not an asset account but is a liability account which will have a credit balance. A debit balance is actually refers to account receivable account.

This cannot relate to semantic relation because the classification of account payable as an asset is incorrect. Account payable is actually a liability so there is untrue semantic relation with this argument.

There is no pragmatic relation with this argument.

1. All asset accounts have debit balances.

The land and buildings account is an asset account.

The land and buildings account has a debit balance.

Answer:

Since this is the syntactically relation so the argument is valid because the premises and conclusion are true by following logical and sound reasoning*.

The semantic accuracy of a premise needs to be established by reference to real world descriptive accuracy. The land and buildings are assets and have a debit balance so the conclusion is based from arguments correspond to real world observations thus semantic relation with argument is valid.