Accounting Approaches: Deductive vs. Inductive Approaches

Two major divisions exist regarding the classification of accounting approaches: the inductive and deductive method. "In the deductive or judgmental approach, relevant environmental factors are identified, and, by linking these to national accounting practices, international groupings or development patterns are proposed. In the inductive or empirical approach, individual accounting practices are analyzed, development patterns or groupings are then identified, and finally explanations keyed to a variety of economic, social, political, and cultural factors are proposed" (International accounting patterns, culture, and development, 2012, Wiley: 35-36). In other words, much as in philosophy, in the deductive approach, the analysis proceeds from the general to the specific, while in the inductive approach, the classification system proceeds from the specific to the general.

The first and still one of the most popular deductive methodologies was first developed in 1967 by Gerhard Mueller. Mueller identified four classifications of accounting...
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