Advantages Of Positive Accounting Theory

Half a defense of Positive Accounting Theory

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21st April 2017

Abstract
Positive Accounting Theory, abbreviated as PAT aims to examine the positive approach to accounting research as well as contrast accounting practices to Normative Accounting Theories. Academics view positive/scientific accounting as the total number of contracts the company has entered. Efficiency is a core driver of success when it comes to positive accounting. Normative accounting, on the other hand, tells policy makers what should be done based on the notional principle. PAT starts with specific policies and generalizes them to higher level principles while NAT starts with a theory and deduces it to specific policies.
Positive Accounting

The articles by Watts and Zimmerman in 1978 brought to focus critiques both related to the economy and those based on issues about the philosophy of science. It also presents a set of assumptions which are crucial if scientific research is to be seen as a possible scholarly project. Although the assumptions may turn out to be false, they should not be seen as unreasonable. Quantitative researchers combine hypothesis testing logic and additional features to detect incorrect predictions. Qualitative researchers on the other hand use hypothesis as a means of viewing observational findings. The success of positive accounting research is seen as a result of setting the standard too low. ‘Normal’ science description by Kuhn’s fits scientific research far much better than traditional science. He suggests that actual research may be used as a model of solving puzzles within a social group regardless of the contribution derived from solutions of such problems. He sees science as a game where the rules are set by the relevant community, and the occupants of that community are allowed to play as long as they follow the set rules just as the World Chess Federation defines the chess rules in the world. Any single individual who fails to follow the rules is eliminated from the game. Researchers publish their work and move up the career ladder. In all research papers advice is given to future researchers based on the

Hume, however, argues that theories should not be proven correct from selection of data. This leads to the acceptance of Popper’s procedure which can be summarized as; observe then develop preliminary ideas, develop a formal theory which is testable and in line with reliable evidence, this is to be followed by testing the theories developed and rejection of those that are no in line with the test. The testing should involve two or more theories. Finally, the researcher is to keep repeating the last two steps so as to continually develop a set of methods that work and are correct. The key distinguisher of a creative idea in science and that of other fields is the continuous repeat to prove it wrong through subsequent and continuous