Question 1

Which of the following is true regarding the role of professional judgment in financial reporting?

Accepted Answer

A)  Accountants are always subjective in their judgments. 
B)  Information generated should faithfully represent transactions and be neutral and verifiable. 
C)  The consideration of economic and social standards implies objectivity in their development and implementation. 
D)  Accountants are never required to apply professional judgment. 
A)  Accountants are always subjective in their judgments. 
B)  Information generated should faithfully represent transactions and be neutral and verifiable. 
C)  The consideration of economic and social standards implies objectivity in their development and implementation. 
D)  Accountants are never required to apply professional judgment. B

Question 2

'In the process of introducing regulation,the organisations that are subject to the regulation will ultimately come to control the regulators'.This statement denotes:

Accepted Answer

A)  Public interest theory 
B)  Capture theory 
C)  Private interest theory 
D)  Economic interest group theory 
A)  Public interest theory 
B)  Capture theory 
C)  Private interest theory 
D)  Economic interest group theory B

Question 3

Advocates of which theory would argue that the government is best able to develop accounting standards because it has greater enforcement powers,and is more likely to be less responsive to pressures from interest groups?

Accepted Answer

A)  Capture theory 
B)  Private interest theory 
C)  Economic interest theory 
D)  Public interest theory 
A)  Capture theory 
B)  Private interest theory 
C)  Economic interest theory 
D)  Public interest theory D

Question 4

Accounting theories should be:

Accepted Answer

A)  Inductive 
B)  Deductive 
C)  Descriptive 
D)  None of the given options is correct. 
A)  Inductive 
B)  Deductive 
C)  Descriptive 
D)  None of the given options is correct.

Question 5

Which of the following is not an argument for regulation?

Accepted Answer

A)  Markets for information are not efficient, and therefore produce a sub-optimum amount of information given the problem of 'free riders'. 
B)  The capital market is efficient, but only 'on average'. 
C)  Capital markets require information, and therefore firms that do not supply it will be punished. 
D)  Information asymmetry exists, because not everyone has the same power over resources to obtain the information they need. 
A)  Markets for information are not efficient, and therefore produce a sub-optimum amount of information given the problem of 'free riders'. 
B)  The capital market is efficient, but only 'on average'. 
C)  Capital markets require information, and therefore firms that do not supply it will be punished. 
D)  Information asymmetry exists, because not everyone has the same power over resources to obtain the information they need.

Question 6

Who has overall responsibility for issuing accounting standards in Australia?

Accepted Answer

A)  The Financial Reporting Council (FR
C)  
B)  The Australian Accounting Standards Board (AAS
B)  
C)  The International Accounting Standards Board (IAS
B)  
D)  The Australian Accounting Research Foundation (AARF) 
A)  The Financial Reporting Council (FR
C)  
B)  The Australian Accounting Standards Board (AAS
B)  
C)  The International Accounting Standards Board (IAS
B)  
D)  The Australian Accounting Research Foundation (AARF)

Question 7

Which of the following is a criticism of the double-entry financial accounting system?

Accepted Answer

A)  It has a general inability to take the social and environmental consequences of a reporting entity's existence into account. 
B)  It uses a system of debts and credits to account for increases and decreases, instead of positive and negative numbers. 
C)  Its initial development in a generally unregulated environment has resulted in a lack of uniformity and comparability. 
D)  All of the given options are correct. 
A)  It has a general inability to take the social and environmental consequences of a reporting entity's existence into account. 
B)  It uses a system of debts and credits to account for increases and decreases, instead of positive and negative numbers. 
C)  Its initial development in a generally unregulated environment has resulted in a lack of uniformity and comparability. 
D)  All of the given options are correct.

Question 8

Which of the following is an example of a normative accounting theory,or research?

Accepted Answer

A)  Conceptual frameworks of accounting 
B)  Critical perspectives of accounting practice 
C)  True income theories 
D)  All of the given options are normative accounting theories. 
A)  Conceptual frameworks of accounting 
B)  Critical perspectives of accounting practice 
C)  True income theories 
D)  All of the given options are normative accounting theories.

Question 9

What is the minimum level of accounting knowledge that readers of financial statements are assumed to possess,according to most professional accounting bodies around the world?

Accepted Answer

A)  None 
B)  A level of knowledge sufficient to understand the financial reports properly 
C)  A sound working knowledge 
D)  An expert level of knowledge 
A)  None 
B)  A level of knowledge sufficient to understand the financial reports properly 
C)  A sound working knowledge 
D)  An expert level of knowledge

Question 10

Which of the following statements is not true for accountants in general?

Accepted Answer

A)  They should be objective and free from bias when performing their duties. 
B)  The information they report should represent faithfully the underlying transactions and events. 
C)  They adopt different accounting methods to suit their own needs, and the needs of the company. 
D)  None of the given options is correct. 
A)  They should be objective and free from bias when performing their duties. 
B)  The information they report should represent faithfully the underlying transactions and events. 
C)  They adopt different accounting methods to suit their own needs, and the needs of the company. 
D)  None of the given options is correct.

Question 11

Which of the following is a characteristic of capture theory?

Accepted Answer

A)  In deciding on a particular regulation, regulators consider the impact on key voters and on election finances. 
B)  The regulated subsequently try to control the regulator, to achieve their self-interest. 
C)  The regulator is a neutral arbiter, and does not let its own interest impact on its rule-making process. 
D)  None of the given options is correct. 
A)  In deciding on a particular regulation, regulators consider the impact on key voters and on election finances. 
B)  The regulated subsequently try to control the regulator, to achieve their self-interest. 
C)  The regulator is a neutral arbiter, and does not let its own interest impact on its rule-making process. 
D)  None of the given options is correct.

Question 12

Which of the following arguments supports the view that regulation is not necessary,particularly to the extent that it currently exists?

Accepted Answer

A)  Accounting information is like any other good, and people will be prepared to pay for it to the extent that it has a use. 
B)  Markets for information are not efficient and therefore produce a sub-optimum amount of information, given the problem of 'free riders'. 
C)  Investors need protection from fraudulent organisations that may produce misleading information. 
D)  Information asymmetry exists because not everyone has the same power over resources to obtain the information they need. 
A)  Accounting information is like any other good, and people will be prepared to pay for it to the extent that it has a use. 
B)  Markets for information are not efficient and therefore produce a sub-optimum amount of information, given the problem of 'free riders'. 
C)  Investors need protection from fraudulent organisations that may produce misleading information. 
D)  Information asymmetry exists because not everyone has the same power over resources to obtain the information they need.

Question 13

Which of the following theories asserts that regulators are not initially put in place to protect the public interest,and are driven by self-interest?

Accepted Answer

A)  Private interest theory 
B)  Public interest theory 
C)  Capture theory 
D)  All of the given options are correct. 
A)  Private interest theory 
B)  Public interest theory 
C)  Capture theory 
D)  All of the given options are correct.

Question 14

Financial accounting leads to the generation of:

Accepted Answer

A)  Reports to meet the specific information needs of users 
B)  Monthly financial reports for management 
C)  Special purpose financial reports 
D)  General purpose financial reports 
A)  Reports to meet the specific information needs of users 
B)  Monthly financial reports for management 
C)  Special purpose financial reports 
D)  General purpose financial reports

Question 15

Which of the following expectations regarding the economic and social consequences of accounting standards on affected parties is not in line with statements by standards-setters?

Accepted Answer

A)  Accounting standards should be neutral and free from bias. 
B)  Accounting standards should represent faithfully the underlying transactions. 
C)  Accounting standards should consider the potential impact on others. 
D)  None of the given options is correct. 
A)  Accounting standards should be neutral and free from bias. 
B)  Accounting standards should represent faithfully the underlying transactions. 
C)  Accounting standards should consider the potential impact on others. 
D)  None of the given options is correct.

Question 16

Which of the following statements is true about accounting measurements such as profits and assets?

Accepted Answer

A)  They are subject to professional judgment. 
B)  They would not vary if prepared by different accountants, providing they were based on the same set of accounting standards. 
C)  They are based on hard, objective, evidence. 
D)  All of the given options are correct. 
A)  They are subject to professional judgment. 
B)  They would not vary if prepared by different accountants, providing they were based on the same set of accounting standards. 
C)  They are based on hard, objective, evidence. 
D)  All of the given options are correct.

Question 17

Which of the following is a reason why accounting,and accountants,can be considered very powerful?

Accepted Answer

A)  The emphasis on profitability measures provides support to profitable companies which may not be worthy of support under other measures. 
B)  The provision of purported objective information provides users with a source of power to drive changes to a corporation's behaviour. 
C)  The output of the accounting process impacts on many decisions which can result in transfers of funds, and therefore wealth. 
D)  All of the given options are correct. 
A)  The emphasis on profitability measures provides support to profitable companies which may not be worthy of support under other measures. 
B)  The provision of purported objective information provides users with a source of power to drive changes to a corporation's behaviour. 
C)  The output of the accounting process impacts on many decisions which can result in transfers of funds, and therefore wealth. 
D)  All of the given options are correct.

Question 18

What is the role of the accounting profession in the US with regard to stipulating accounting standards?

Accepted Answer

A)  It has the authority to develop and issue accounting standards. 
B)  It has been delegated responsibility from the Securities and Exchange Commission, providing it performs such duties diligently. 
C)  Indirect authority. Standards are issued by the Accounting Principles Board, a committee of the accounting professional bodies. 
D)  No authority. Standards are issued by the Federal Accounting Standards Board, which is independent of the accounting profession. 
A)  It has the authority to develop and issue accounting standards. 
B)  It has been delegated responsibility from the Securities and Exchange Commission, providing it performs such duties diligently. 
C)  Indirect authority. Standards are issued by the Accounting Principles Board, a committee of the accounting professional bodies. 
D)  No authority. Standards are issued by the Federal Accounting Standards Board, which is independent of the accounting profession.

Question 19

Which of the following is not true for the International Accounting Standards Board (IASB)?

Accepted Answer

A)  The IASB is an independent standard-setting board that is publicly accountable to a monitoring board of capital market authorities. 
B)  The IASB receives funding from the private sector, including mandatory levies on listed and non-listed entities in countries that utilise its standards. 
C)  The IASB has strong enforcement powers to ensure that entities that have adopted its standards are in full compliance. 
D)  From 2005, the European Union adopted IFRSs for listed companies preparing consolidated financial reports. 
A)  The IASB is an independent standard-setting board that is publicly accountable to a monitoring board of capital market authorities. 
B)  The IASB receives funding from the private sector, including mandatory levies on listed and non-listed entities in countries that utilise its standards. 
C)  The IASB has strong enforcement powers to ensure that entities that have adopted its standards are in full compliance. 
D)  From 2005, the European Union adopted IFRSs for listed companies preparing consolidated financial reports.

Question 20

Which theoretical perspective suggests that where firms are able to choose accounting methods,they will choose those that provide the result desired by the preparers?

Accepted Answer

A)  Efficiency perspective 
B)  Objectivity perspective 
C)  Stakeholder perspective 
D)  Opportunistic perspective 
A)  Efficiency perspective 
B)  Objectivity perspective 
C)  Stakeholder perspective 
D)  Opportunistic perspective

Which of the following is true regarding the role of professional judgment in financial reporting?

'In the process of introducing regulation,the organisations that are subject to the regulation will ultimately come to control the regulators'.This statement denotes:

Advocates of which theory would argue that the government is best able to develop accounting standards because it has greater enforcement powers,and is more likely to be less responsive to pressures from interest groups?

Accounting theories should be:

Which of the following is not an argument for regulation?

Who has overall responsibility for issuing accounting standards in Australia?

Which of the following is a criticism of the double-entry financial accounting system?

Which of the following is an example of a normative accounting theory,or research?

What is the minimum level of accounting knowledge that readers of financial statements are assumed to possess,according to most professional accounting bodies around the world?

Which of the following statements is not true for accountants in general?

Which of the following is a characteristic of capture theory?

Which of the following arguments supports the view that regulation is not necessary,particularly to the extent that it currently exists?

Which of the following theories asserts that regulators are not initially put in place to protect the public interest,and are driven by self-interest?

Financial accounting leads to the generation of:

Which of the following expectations regarding the economic and social consequences of accounting standards on affected parties is not in line with statements by standards-setters?

Which of the following statements is true about accounting measurements such as profits and assets?

Which of the following is a reason why accounting,and accountants,can be considered very powerful?

What is the role of the accounting profession in the US with regard to stipulating accounting standards?

Which of the following is not true for the International Accounting Standards Board (IASB)?

Which theoretical perspective suggests that where firms are able to choose accounting methods,they will choose those that provide the result desired by the preparers?

Introduction to Financial Accounting Theory

The Regulation of Financial Accounting

International Accounting

Measurement Issues: Accounting for the Effects of Changing Prices and Market Conditions

Normative Theories of Accounting: The Case of Conceptual Framework Projects

Positive Accounting Theory

Unregulated Corporate Reporting Decisions: Considerations of Systems-Oriented Theories

Extending Corporate Accountability: The Incorporation of Social and Environmental Factors Within External Reporting

Reactions of Capital Markets to Financial Reporting

Reactions of Individuals to Financial Reporting: An Examination of Behavioural Research in Accounting

Critical Perspectives of Accounting

Filters

Exam 2: The Financial Reporting Environment

Which of the following is true regarding the role of professional judgment in financial reporting?

'In the process of introducing regulation,the organisations that are subject to the regulation will ultimately come to control the regulators'.This statement denotes:

Advocates of which theory would argue that the government is best able to develop accounting standards because it has greater enforcement powers,and is more likely to be less responsive to pressures from interest groups?

Accounting theories should be:

Which of the following is not an argument for regulation?

Who has overall responsibility for issuing accounting standards in Australia?

Which of the following is a criticism of the double-entry financial accounting system?

Which of the following is an example of a normative accounting theory,or research?

What is the minimum level of accounting knowledge that readers of financial statements are assumed to possess,according to most professional accounting bodies around the world?

Which of the following statements is not true for accountants in general?

Which of the following is a characteristic of capture theory?

Which of the following arguments supports the view that regulation is not necessary,particularly to the extent that it currently exists?

Which of the following theories asserts that regulators are not initially put in place to protect the public interest,and are driven by self-interest?

Financial accounting leads to the generation of:

Which of the following expectations regarding the economic and social consequences of accounting standards on affected parties is not in line with statements by standards-setters?

Which of the following statements is true about accounting measurements such as profits and assets?

Which of the following is a reason why accounting,and accountants,can be considered very powerful?

What is the role of the accounting profession in the US with regard to stipulating accounting standards?

Which of the following is not true for the International Accounting Standards Board (IASB)?

Which theoretical perspective suggests that where firms are able to choose accounting methods,they will choose those that provide the result desired by the preparers?

Introduction to Financial Accounting Theory

The Regulation of Financial Accounting

International Accounting

Measurement Issues: Accounting for the Effects of Changing Prices and Market Conditions

Normative Theories of Accounting: The Case of Conceptual Framework Projects

Positive Accounting Theory

Unregulated Corporate Reporting Decisions: Considerations of Systems-Oriented Theories

Extending Corporate Accountability: The Incorporation of Social and Environmental Factors Within External Reporting

Reactions of Capital Markets to Financial Reporting

Reactions of Individuals to Financial Reporting: An Examination of Behavioural Research in Accounting

Critical Perspectives of Accounting

Filters