Positive Accounting Theory Research Paper Example | Topics and Well Written Essays - 1250 words

Positive Accounting speculation - Research Paper ExampleThe predictions of real world situations protagonist slight businesses in choosing the appropriate chronicle policies that would help them in advancing. The predictions of positive account statement theory with regards to the real world situation go a long way in assisting firms to react positively to new standards of account introduced by the legal bodies. Moreover, the general objective of the positive accounting theory is to enable firms to predict and understand their accounting policies choices. The theory in like manner puts into consideration, the economic consequences of the policies on the firms and the economy in general. Positive Accounting Theory Small businesses organize their trading trading operations in an efficient manner using the positive accounting theory, which helps firms in maximizing economic opportunities for emersion and survival in the business world. Due to the need for business operations efficiency, firms will need to smirch contract related costs. Ordinarily, contract related costs include negotiation costs, monitoring and renegotiation costs with regards to accounting variables in terms of financial ratios and net income accounting information. Minimization of contract related costs richly relies on the mandate of a firm in choosing the most appropriate accounting policies with regards to its operations. ... environment, appropriate accounting policies and contract related costs minimization whitethorn be comprised by the opportunistic interests of the companys management. Political cost hypothesis The semipolitical environment is proved to interfere in business operations in many cases, thus affecting managerial decisions with regards to accounting policies. The more a company faces political costs, the greater the chances that managers of a particular firm will choose accounting policies that alter current report earnings to future expected earnings. This is mainly because current reported earnings that depict high levels of bread will certainly lead to political interferences that may influence incorporation of new government regulations and revenue charges. These interferences are relevant to both small and large businesses though growth and stability of small businesses may be greatly hampered as compared to large entities that are stable. Small Businesses Positive accounting theory applications help managers in spearheading growth and maturation of small businesses, which play an important role of creating employment and growth of perfect(a) Domestic Product. Governments such as the United Kingdom federal government have enacted policies and programs that assist small businesses to develop. Strategies have been outlined by governments of developing countries and trade organizations to facilitate growth of small businesses. Banks have also played a big role in growth and development of enterprises through loans and involvement in policy formulation and innovations. Moreover, best accounting policies that have been practically efficient in spearheading corporate development have been implemented. The existing variations in different economies directly impact on the differences