The Positive Accounting Theory and the Normative.
These two articles prompted criticism from three different perspectives.. who claim that the positiv e accounting papers they. is a prerequisite to havi ng normative accounting theory; (2).
Normative accounting theory, on the other hand, is viewed in a slightly more subjective way and considers what accountancy should be like or what accountants should do in an ideal world. This view is supported by theorists such as Patton and Littleton (1940) and Alexander (1944) who specified that accounting should, “record, collate and present economic truths” (Patton et al,).
This paper reviews five important works on normative accounting theory - MacNeal (1939), Paton and Littleton (1940), Littleton (1953), Chambers (1966), and Ijiri (1975) - with emphasis on.
Normative theory is a broad type of many theories of accounting, such as public interest theory, capture theory and the economic interest theory. Public Interest Theory According to Posner (1974, p.335), public interest theory holds that regulation is supplied in response to the demand of the public for the correction of inefficient or inequitable market practices.
Positive Accounting Theory is the branch of academic research in accounting that tries to make good predictions of real world events and translate them to accounting transactions. This contrasts with normative accounting theory, which that tries to recommend what should be done.
One theoretical approach recently emphasized in the accounting literature is positive accounting theory. Synonymous with this theoretical view are the 1978 and 1979 articles published by Ross Watts and Jerold Zimmerman. These two articles prompted criticism from three different perspectives.
A review of the published critiques of positive accounting theory shows that although critiques based on philosophy of science may not be very effective, economics- based critiques that emphasize the limitations of equilibrium-based economic analysis offer a promising avenue for methodological critiques of positive accounting theory.