Table of Contents
Introduction 2
Summary of the Article 2
Overview of Positive Accounting 2
Research Question 3
Theoretical Framework: 3
The Significance and Limitations of the Article: 4
Findings of Article 4
Conclusions 5
Bibliography 5
References 6

Introduction
The main purpose of this report is to focus the positive accounting theory “Towards a Positive Theory of the Determination of Accounting Standards” and written by (Watts & Zimmerman, 1978) Ross L. Watts and Jerold L. Zimmerman, who indicated with a number of significant research in order to describe and contribute positive accounting theory
Summary of the Article

The element of this article has found that management wealth are based on accounting standards such as cost of production, (purchase, labour and overhead) taxes, political influence. All of these elements are effect in a different way on the management benefits. One of the main points of this article is that earning policy which means (decreasing profit or increasing profit) affects the company size, reputation of entities and certain standards. As a result of this development, management of the organization wealth will increase in a positive way. It is definitely clear to say that (Watts & Zimmerman, 1978) used solid data from the entities, which produce information to the FASB's Discussion Memorandum on General Price Level Adjustment. Findings of this report include to "choose accounting standards which report lower earnings due to political and regulatory considerations".

Overview of Positive Accounting
In this particular article there are two mains assumptions First, "individuals act to maximize their own utility"(Watts and Zimmerman, 1978). Second, "management's utility is a positive function of the expected compensation in the future periods (or wealth) and a negative function of the dispersion of