Final answer:
Normative accounting theory prescribes how accounting should be, based on values and opinions, without focusing on current practices. Positive accounting theory explains and predicts actual accounting practices by analyzing real-world data. Examples of each theory include recommendations on inventory valuation methods and studies on depreciation methods, respectively.
Step-by-step explanation:
Normative accounting theory and positive accounting theory differ fundamentally in their approaches and objectives. Normative accounting theory is prescriptive, suggesting how accounting should be based on values and opinions. It proposes ideal practices but does not necessarily consider actual accounting practices. An example of normative accounting theory could be a recommendation that firms must always use a specific method for valuing inventory that is believed to reflect the true economic benefits, regardless of whether firms currently use it.
In contrast, positive accounting theory seeks to explain and predict accounting behavior by analyzing existing accounting practices. It does not prescribe what practices should be but rather examines what practices are actually in use and why they prevail. For instance, a study analyzing why firms choose between different depreciation methods and the effects on their financial statements would be an example of positive accounting theory.