Accounting theory consists of all the accounting principles and methodologies. It is classified into three types:
1. Structural theory: It is also popularly known as Traditional or Classical theory. It describes the existing practices in accounting and the data collection structure and financial reporting process.
2. Interpretational theory: It is also known as Semantical theory that emphasizes on providing interpretations and gives a solid base for assessing accounting practices, making hypothesis and resolving accounting-based issues.
3. Behavioural theory: It is also called as Pragmatic theory that emphasises on decision-making and on the accounting group behaviour.