1 Positive Accounting TheoryPositive accounting theory is undoubtedly an explication of accounting practice; theory based on economics. R. L. Watts and J. L. Zimmerman developed positive accounting theory in the 1980s at the University of Rochester's William E School of Administration. People sometimes don't know what they want. So there are several options available to accountants. There are some logical facts for choosing a specific method. By choosing a specific method, accountants will first maximize their own benefit, then the company's benefit, the shareholders' benefit, and finally the social benefits. A specific method will allow accountants to feel better about doing their job the way they like, the way they know how, and the way they do it best (Jayne Godfrey). For example, the accountant will write the accumulated depreciation on the asset value side for a large company, while in case of inadequate balance sheet, it is better to enter the accumulated depreciation on the credit side, so that the company will have extra money in debt (Ken Leo, John Hoggett, 2012). Accountants will use the choice of accounting method depending on the situation. Positive accounting theory consists of different types of assumptions such as the bonus plan, political cost, and debt hypothesis, which allow managers to choose one specific method over another. It is accountants' theory and it is descriptive and accountants will tell you what to record. 1.1 Main ObjectivePositive accounting theory efforts to explain the following1. Choice by managers of a particular accounting method, in terms of personal interest.2. The relationship between shareholders, employees, customers etc.3. How the financial accounting system can minimize costs by associating competing interests.2 Agency Theory Jensen and Meckl...... center of paper...... can use the accounting manual in the circumstances where they need information. Accountants want an individual choice of method, which gives them the freedom to work and greater security in doing so. Different people have different ways of explaining, different ways of understanding things. So, it is always better to perform what people specialize in. The accountant is the same as other groups of people, as they like it, and the accountants do better. All accountants get the same results despite using a different individual choice of method as they all follow the same equation and accounting manual. The benefit to the accounting firm is provided by the accountant using a particular accounting method.6 ReferencesAASB, Australian Accounting Standards Board, Statement of Accounting Concepts SAC4 'Definition and recognition of the elements of financial statistics