DB2- Case 4-4
ACCT 632
Liberty University
Dr. Stephen Patrick
April 4, 2021
Discuss the deductive, inductive, and pragmatic research methods. Include in your
discussion examples of accounting research that used each method.
Deductive Approach
The deductive approach begins with identifying objectives and once the objectives are identified,
certain key definitions and assumptions must be stated. The researcher must then develop a
logical structure based on the definitions and assumptions (Schroeder, et al 2020). The deductive
approach constitutes developing an assumption based on the existing theories and forming a
research plan to test the assumption (Wilson, 2010). The deductive approach is often described as
general to specific (top-down) logical process. The deductive approach is essentially a mental or
“armchair” type of research. If the premises of the deductive approach are accepted, then the
conclusion must also be accepted. Therefore, the validity of any theory develop through this
process is highly dependent on the researcher’s ability to correctly identify and relate the various
components in a logical manner (Schroeder, et al 2020). An example of accounting research that
used a deductive approach is historical cost accounting.
Inductive Approach
The induction approach involves the making of observations of detailed measurements and then
drawing generalized conclusions or principles from those observations. This method is described
as “going from the specific to the general” (Schroeder, et al 2020). The inductive approach
includes looking for a pattern based on the observations and developing a theory for those
patterns through hypotheses (Bernard, 2011). The advantage of the inductive approach is that it is
not necessarily constrained by a preconceived model or structure. The research is free to make
any observations he may deem relevant (Zalaghi, 2016). “Accounting Principles Board (APB)
Statement No. 4 is an example of inductive research. The GAAP described in the statement were
based primarily an observation of current practice” (Schroeder, et al 2020).
Pragmatic Approach
The pragmatic approach involves the development of ideas that are in agreement with the real
world and find usefulness in a realistic situation. Once the problem has been identified, the
pragmatic approach looks for a utilitarian solution, one that will resolve the problem. This does
not suggest that the solution will accomplish some stated objective. Therefore, the answers
obtained through the pragmatic approach should be viewed as tentative solutions to problems
(Schroeder, et al 2020). An example of accounting research that used a pragmatic approach is the
Last In, First Out (LIFO) inventory method. LIFO started as an accepted practice in only very
restricted areas and only under specific conditions, but the usefulness of the method was soon
applied to other areas and it has become a generally accepted procedure in most areas of
inventory valuation.
Biblical Application
Understanding different types of research methods are important because it can help us in finding
a solution that will solve our problems. John 8:32 said; “And you will know the truth, and the truth
will set you free” (ESV). The centrality of Christianity is based on the truth and knowing different
types of research methods can help us find the truth. Many apologetics used research
methodology for defending the Christian faith, likewise, the researcher can use research
methodology to provide information to stockholders and other outsiders to permit them to make
useful predictions regarding the future operations of the company.
References:
Bernard, H.R. (2011). Research methods in anthropology. (5th ed). Alta Mira Press.
Schroeder, R. G., Clark, M. W., & Cathey, J. M. (2020). Financial accounting theory and
analysis: Text and cases (13th ed.). Hoboken, NJ: Wiley
Wilson, J. (2010). Essentials of Business Research: A Guide to Doing Your Research Project.
SAGE Publications.
Zalaghi, H. (2016). The Role of Deductive and Inductive Reasoning in Accounting Research and
Standard Setting. Asian Journal of Finance & Accounting
