"The Main Difference Between Normative and Positive (Accounting)theories Is That

question 36

Essay

"The main difference between normative and positive (accounting)theories is that normative theories are prescriptive,whereas positive theories are descriptive,explanatory or predictive".J.Godfrey,et el,'Accounting Theory',7^th Ed.p.29.
Explain and discuss the quotation.Include in your answer an opinion as to whether the two approaches are compatible or incompatible.

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Definitions:

Canadian GAAP

Canadian Generally Accepted Accounting Principles, a set of accounting standards used in Canada to ensure financial statements are consistent and transparent.

Primary Beneficiary

The entity that has the majority of risks and rewards from a variable interest entity, leading to the requirement of consolidating the entity's financial statements.

Amortization

The gradual reduction of a debt over a period of time through regular payments or the systematic allocation of intangible asset costs over its useful life.

Unrealized Gain

A profit that results from holding onto an asset rather than selling it, not reflected in cash flow or income until the asset is sold.