Positive accounting is the branch of accounting that attempts to explain and predict accounting phenomena from a positive perspective, rather than from a normative or negative perspective. In other words, positive accounting theory seeks to describe how things are, rather than how they should be.
The goal of positive accounting theory is to develop descriptive theories that can be used to explain actual accounting practices. This contrasts with normative accounting theory, which prescribes how accounting practices should be.
One of the key assumptions of positive accounting theory is that economic agents are rational and self-interested. This means that they will make decisions that are in their own best interests, and they will take into account all relevant information when making these decisions.
Positive accounting theory has been used to explain a variety of accounting practices, such as the use of accounting conservatism, the disclosure of accounting information, and the choice of accounting methods.
Critics of positive accounting theory argue that it fails to take into account the fact that accounting decisions are often made for reasons other than simple self-interest. They also argue that the assumption of rationality is unrealistic and does not reflect how people actually make decisions.
Despite these criticisms, positive accounting theory remains an important framework for understanding and explaining accounting practices.