BACHELOR OF BUSINESS ADMINISTRATION

Detailed explanation-1: -Positive Accounting Theory (PAT) that popularized by Watts and Zimmerman is one of positive theory accounting. PAT is concerned with explaining accounting practices. It is designed to explain and predict which firms will not use a particular method.

Detailed explanation-2: -Background. Positive accounting emerged with empirical studies that proliferated in accounting in the late 1960s. It was organized as an academic school of thought of discipline by the work of Ross Watts and Jerold Zimmerman (in 1978 and 1986) at the William E.

Detailed explanation-3: -Positive accounting theory seeks to understand why accounting practices are employed by accountants in different circumstances and by different firms. Three hypotheses in positive accounting theory: bonus plan, debt covenant and political cost.

Detailed explanation-4: -The positive accounting theory attempts to describe and better predict accounting practices. This theory is highly dependent on the task undertaken in economics, and it mainly borrows the principles from the efficient market hypothesis, capital assets pricing model, and agency theory.