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Normative theories explain what should be

From

Cover of Financial Accounting Theory and Analysis: Text and Cases, 11th Edition

Note

A theory that is not based on observation, but on how an accounting process should be done
Instead of looking at what is already happening at companies today, normative accounting theory tells accounting policy makers what should be done based on a theoretical principle.
Normative starts with the theory and deduces to specific policies, while positive starts with specific policies, and generalizes to the higher-level principles.