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Positive Accounting theory always attempts to make good perceptions of various events taking place at the real world and translating those events to transactions in accounting for a better understanding. This part of the assignment discusses various norms of theories recommendations. Two theories are explained in the part which earnings management is explained. The article that we talk about in this assignment is discussed by Flora Guidrya and Steve Rockc. A number of scholarly articles, journals, papers and educational websites were used in the assignment in order to understand the various strategies that can be used for positive accounting. The article that was used in the assignment is the effect of bonus schemes on accounting Decisions.
The below study also investigates on the point where dividend policy might have an impact on the accounting theory and the ways in which the objective can be obtained, required data and collection method of financial statements that require proxies related to decisions that needs to be made for and kind of investment. The paper also discussed the way in which the tests are conducted and its impact on the dividend and investment policy.
Conceptual UnderstandingThe prediction is mainly on what positive theories try to explain to us. They include the actions that will be chosen by various accounting policies as well as the ways in which the firm will tend to react when it comes to accounting standards that are implemented newly or changed. An analysis was conducted based on the unit level data of the business that helped in reducing the problems related to data at the firm level. Several tests need to be conducted in order to understand the core problem when it comes to adoption of a bonus system and the way it is going to change the accounting management procedures
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