Which of the following is not assumed in Positive Accounting Theory?
A) Individuals (including managers) are economically rational in their behaviour.
B) Individuals (including managers) are primarily motivated by self-interest.
C) The natural objective of managers is to maximise the wealth of the firm.
D) Managers are not indifferent in selecting accounting methods to use.

Question

Quizplus · Accepted Answer

Positive Accounting Theory does not assume that the natural objective of managers is to maximise the wealth of the firm. Rather, it assumes that managers are motivated by self-interest and will make accounting choices that will increase their own wealth or utility.

Which of the Following Is Not Assumed in Positive Accounting