Comparative Study: Normative and Positive Accounting Theory Report

This report provides a comprehensive overview of normative and positive accounting theories, highlighting their differences, advantages, and disadvantages. Normative accounting theory takes a subjective approach, focusing on value judgments and how a firm should look in the future, while positive accounting theory utilizes data collection and bookkeeping for an objective analysis of past transactions. The report discusses the challenges and problems associated with both theories, including the limitations of positive accounting in handling security at a financial level and the risks related to legal liability in normative accounting. It concludes by emphasizing the importance of understanding these theories in the accounting profession and their role in standardizing practices and addressing financial scandals. References to various academic articles are included to support the analysis.

Normative vs positive
accounting theory
REPORT

Introduction
 The accounting theory is about the different research methods that is
mainly to utilize the development study for accounting. The theory is
developed with debates that are emerging through the manner that is
set through financial theory development and applications in
accounting profession.

Normative Accounting Theory
 The theory is about the company business or the marketing plan which
takes the subjective approach. The endeavors is to characterize the
financial future with firm should look like. The normative accounting
focus on the value judgements which is for using the subjective
mortality within accountancy practice (Glover, 2014).

Positive Accounting Theory
 They are for tiling the data collection and booking keeping which is
considered to be an effective approach. The use of the company
includes the physical transaction history with analysis and discerns for
the ramifications (Zeff, 2014). The comparison is of the revenue against
the expenses to figure out the enterprise as running at a net loss or
gain.

Normative vs positive accounting
theory
 The positive accounting comes with the higher level principles where
there are specific for explaining the transactions in the past or the
business economic positions. There are disadvantages to the theory
with the largest users are following from the assumptions that are
assumed with the business owner acting out of self-interest.
 The normative accounting is about deducing the policies with the
options to predict about financial company sustainability and then
advising the plans for the different events of future.

Advantage of theories
 The theories are filling where positive accounting is based on what is
happening and how one can work with the normative standards. There
are theoretical processes to handle the day-to-day evolvement which
does not diverge from any of the economic concepts. There are results
of accounting which are completely practical and principled (Beattie,
2014).

Disadvantage of theories
 Disadvantage of positive accounting is demonstrated through banks
where the accounting is handled through security at financial level.
There are ways to get hid of the changes in material that are for the
handling of operations at bank. The changing values are set to the
company financials and the practices.

Challenges and Problems of positive
accounting
 The positive accounting theory is mainly to discuss about the marketing
failures and the regulations that are for the analyses which is from the
different positive economics. There are forms to include GAAP to
represent the comparatives. The companies are directly subjected to
the SEC rules and regulations (Williams & Rvenscroft, 2015).

Challenges of Normative Accounting
 They generally focus on the handling the codification of practices and
then premises to prescriptions. There are methods to handle the tests
with risks related to the legal liability and the professional censures
(Chiapello, 2017). There are loss of client and the use of it includes the
practice of standardization and the training related to handle the
excuse of market.

Conclusion
 The differences in applications are set with raising the awareness that
is involved in handling the accounting profession. There are underlying
basis for the normative theory that helps in assisting and standardizing
the practices for facilitating the teaching in a coherent manner. The
focus is on implementing the notable forms of financial accounting
scandals.

References
 Glover, J., 2014. Have academic accountants and financial accounting standard setters
traded places?. Accounting, Economics and Law Account. Econ. Law, 4(1), pp.17-26.
 Zeff, S.A., 2014. Some Historical Reflections on “Have Academics and the Standard
Setters Traded Places”. Accounting, Economics and Law Account. Econ. Law, 4(1),
pp.41-48.
 Beattie, V., 2014. Accounting narratives and the narrative turn in accounting research:
Issues, theory, methodology, methods and a research framework. The British
Accounting Review, 46(2), pp.111-134.
 Williams, P.F. and Ravenscroft, S.P., 2015. Rethinking decision usefulness. Contemporary
Accounting Research, 32(2), pp.763-788.
 Chiapello, E., 2017. Critical accounting research and neoliberalism. Critical Perspectives
on Accounting, 43, pp.47-64.