In this art professionals can use the information and develop theoretical knowledge and perspectives depending on the decisions crafted with the help of information available. Humans have created theories during this period and these theories are developed on the basis of widely used phenomena and predictions about the future. By developing the theory about accounting it can be stated that the information provided is type of guidance for the accountants so they can use these theories and apply them on different situations and circumstances. Theories are present in every field and theories of accounting also are based on true facts and events just like the theories of other sciences. Scientific formulation present in the theories is about the process of inductive reasoning. This process of theory development is based on the observation that is taken by the environment. Many of accounting theories have been derived by the use of inductive reasoning (Deegan, 2014). According to many authors of accounting they believe that many gaps and loopholes are present in the theories and these loopholes can be filled by observing the current situation. Today theories need to be developed on the basis of actual observations and not on the basis of predicted observations and expectations. At this point it can clearly state that the theories of accounting are developed in a way that they are subject to the reality and the point of Ruth Hines can be proved. Hines stated that communicating in the reality and accounting creates reality. This statement is true because the information provided with the help of accounts is based on actual facts that are present and they are equal to reality.
The main objective of accounting information is about the production and distribution of the financial information about the company. It helps in providing useful information to different stake holders and communication between different segments becomes easy. In this way the information provided is an important part for the development of relationship between the company and the stake holders. Now to fulfil the objectives of the stakeholders that are associated with the company, financial information present in the financial reports is neutral. It is also stated in the framework of AASB that the information provided in the accounting should be realistic. No biasness should come in the way and helps the decision maker in taking the decision.