is where theorists tend to advocate their opinions on accounting based upon subjective opiniondeductive logicand inductive methods. In the final analysisnearly all standards are based upon normative theory. Generally conclude that some accounting rule is better or worse than its alternatives. Normative theorists tend to rely heavily upon anecdotal evidence (e.g.examples of fraud) that generally fails to meet tests of academic rigor. For examplethe Wizard reported that Montgomery Ward would fail. Howeverthe Wizard always reports that every company will fail or lose its self identity in a pattern of acquisitions and mergers. Eventuallyhe will always be correct.

This definition is in context to Accounting. See more contextual defintions for Normative Accounting Theory.