Positive accounting theories are more beneficial to accounting practice than normative accounting theories

af wholeative account statement theories are more beneficial to bill pr figureice than normative report theories

Accounting theories provide a foundation of knowledge, understanding and guidelines for practices. However it is important to hold a clear understanding of the focus and purpose of different business relationship theories if they are to be utilized effectively. Two primary account statement theories which provide a basis for understanding the how and the why of history system practices are positive accounting theory and normative accounting theories. The function, application and the benefit of these two theories will be considered to catch out which is the more beneficial in regard to accounting practice.

Positive accounting is the branch of academic research in accounting that focuses on explaining and predicting observed accounting practices (wikipedia.org/wiki/Positive_accounting). The basic premise of positive accounting theory revolves around agency theory and assumes that accounting information is an economic and political commodity where people act in their own self interest. (Godfrey et al., 2006). By undertaking this court to accounting research it is possible to predict how different parties do to one another, and moreover provide an understanding of why parties do or behave in this manner.



This gives rise to two primeval aspects on positive accounting theory that seek to assign behaviours of principles and agents of the firm and include; the efficiency perspective or ex ante that deals with the agents objective to maximize the firms value; and secondly, the opportunistic perspective or ex post that deals with the agents objective to maximize his or her personal interests (Godfrey et al., 2006). Positive accounting theory provides practical explanations when it comes to financial decisions undertaken by management. It considers motivation and incentives faced by management when making these important decisions such as disclosure requirements and...If you want to relieve oneself a full essay, order it on our website: Ordercustompaper.com



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