Question 1

Proponents of the free-market approach to the provision of accounting information advocate that:

Accepted Answer

A) Market mechanisms cannot achieve a socially ideal equilibrium price for accounting information 
B) Market forces can be depended upon to generate any desired information 
C) The free-rider effect will result in an under-production of accounting information 
D) All of the above 
A) Market mechanisms cannot achieve a socially ideal equilibrium price for accounting information 
B) Market forces can be depended upon to generate any desired information 
C) The free-rider effect will result in an under-production of accounting information 
D) All of the above B

Question 2

Which of these statements in relation to the regulation of auditors is not true?

Accepted Answer

A) The choice of statutory regulation rather than self-regulation may reflect political differences between countries in the approach to management of capital markets 
B) Statutory regulation is consistent with a country having a more centralised,interventionist approach to regulation 
C) The worldwide trend in recent years has been towards more self -regulation for auditors. 
D) In France and Italy regulation was from earlier times the responsibility of state authorities. 
A) The choice of statutory regulation rather than self-regulation may reflect political differences between countries in the approach to management of capital markets 
B) Statutory regulation is consistent with a country having a more centralised,interventionist approach to regulation 
C) The worldwide trend in recent years has been towards more self -regulation for auditors. 
D) In France and Italy regulation was from earlier times the responsibility of state authorities. C

Question 3

In which of these countries does taxation law have the greatest influence on financial accounting?

Accepted Answer

A) Australia 
B) US 
C) UK 
D) France 
A) Australia 
B) US 
C) UK 
D) France D

Question 4

In the application of agency theory to accounting the principals most often considered are investors and lenders and the agents most usually considered are managers.

Accepted Answer

A) True 
 B)False

Question 5

Explain why,with the adoption of IFRS by the EU in 2005,each member state was required to set up an independent enforcement body.Do you agree that such a body is a necessary part of an overall system for enforcement of financial reporting requirements?

Accepted Answer

The adoption of IFRS by the EU in 2005 r

Question 6

In 2008 the SEC agreed to permit foreign registrants to file accounts that follow international accounting standards without reconciliation with US GAAP.

Accepted Answer

A) True 
 B)False

Question 7

The IASB sets standards for the private and the public sectors.

Accepted Answer

A) True 
 B)False

Question 8

International Standards on Auditing (ISA)are developed by the IASB.

Accepted Answer

A) True 
 B)False

Question 9

Atkinson and Feltham state that agency theory mainly concentrates on the demand for information for the decision-making purposes.

Accepted Answer

A) True 
 B)False

Question 10

Which of these theories could explain a move towards government control of accounting standards setting in Australia?

Accepted Answer

A) Public interest theory 
B) Regulatory capture theory 
C) Private interest theory 
D) All of the above 
A) Public interest theory 
B) Regulatory capture theory 
C) Private interest theory 
D) All of the above

Question 11

Which of these is a criticism of the public interest theory of accounting regulation?

Accepted Answer

A) The theory is not the only explanation for observed behaviours 
B) Managers of businesses have strong incentives to 'correct' market failure perceptions about their business activities. 
C) A and B 
D) Neither A nor B is a criticism 
A) The theory is not the only explanation for observed behaviours 
B) Managers of businesses have strong incentives to 'correct' market failure perceptions about their business activities. 
C) A and B 
D) Neither A nor B is a criticism

Question 12

International standard setting is now dominated by the IASB and the FASB.

Accepted Answer

A) True 
 B)False

Question 13

Who challenged the public-interest and regulatory capture theorists' view that regulation is a result of government response to rectify inefficiency?

Accepted Answer

A) Walker 
B) Rahman 
C) Stigler 
D) Collett 
A) Walker 
B) Rahman 
C) Stigler 
D) Collett

Question 14

A limitation of theories of regulation such as public interest theory and capture theory is that they are not mutually exclusive.

Accepted Answer

A) True 
 B)False

Question 15

The IASB sets standards for:

Accepted Answer

A) The private sector 
B) The public and private sectors 
C) The public,private and not-for-profit sector 
D) The private and not-for-profit sector 
A) The private sector 
B) The public and private sectors 
C) The public,private and not-for-profit sector 
D) The private and not-for-profit sector

Question 16

'The central economic reason for the origins of government intervention in the operations of various markets in the "public interest" is that of market failure.' J.Godfrey,et el,'Accounting Theory',7th Ed.p.57.
Briefly outline the public-interest theory of regulation of financial reporting including the assumptions on which it is based and discuss the circumstances when market failure is most likely to occur.

Accepted Answer

The public-interest theory of regulation

Question 17

Which of these is not an assumption underlying the public-interest theory of regulation?

Accepted Answer

A) There are agents who will seek regulation on behalf of the public interest 
B) The government has an independent role to play in the development of regulations 
C) The interest of consumers is translated into legislative action through the operation of the internal marketplace 
D) Economic markets are subject to a series of market imperfections or transaction failures 
A) There are agents who will seek regulation on behalf of the public interest 
B) The government has an independent role to play in the development of regulations 
C) The interest of consumers is translated into legislative action through the operation of the internal marketplace 
D) Economic markets are subject to a series of market imperfections or transaction failures

Question 18

"While regulatory frameworks vary between countries,they often have common elements'.J.Godfrey,et el,'Accounting Theory',7th Ed.p.70.
Discuss some of the commonalities and differences in regulatory frameworks between Australia and the USA.

Accepted Answer

Regulatory frameworks for accounting and

Question 19

Regulatory capture has been found to be particularly pronounced in which of the following situations?

Accepted Answer

A) Where there are a large number of client entities 
B) The regulated industry controls the information needed for regulation 
C) The information and product lack complexity 
D) The regulated industry has minimal resources compared to the regulatory agency 
A) Where there are a large number of client entities 
B) The regulated industry controls the information needed for regulation 
C) The information and product lack complexity 
D) The regulated industry has minimal resources compared to the regulatory agency

Question 20

Under IAS 38 'Intangible Asset,Australian companies are permitted to carry forward existing intangible asset values at 1 January 2005.

Accepted Answer

A) True 
 B)False

Proponents of the free-market approach to the provision of accounting information advocate that:

Which of these statements in relation to the regulation of auditors is not true?

In which of these countries does taxation law have the greatest influence on financial accounting?

In the application of agency theory to accounting the principals most often considered are investors and lenders and the agents most usually considered are managers.

Explain why,with the adoption of IFRS by the EU in 2005,each member state was required to set up an independent enforcement body.Do you agree that such a body is a necessary part of an overall system for enforcement of financial reporting requirements?

In 2008 the SEC agreed to permit foreign registrants to file accounts that follow international accounting standards without reconciliation with US GAAP.

The IASB sets standards for the private and the public sectors.

International Standards on Auditing (ISA)are developed by the IASB.

Atkinson and Feltham state that agency theory mainly concentrates on the demand for information for the decision-making purposes.

Which of these theories could explain a move towards government control of accounting standards setting in Australia?

Which of these is a criticism of the public interest theory of accounting regulation?

International standard setting is now dominated by the IASB and the FASB.

Who challenged the public-interest and regulatory capture theorists' view that regulation is a result of government response to rectify inefficiency?

A limitation of theories of regulation such as public interest theory and capture theory is that they are not mutually exclusive.

The IASB sets standards for:

Which of these is not an assumption underlying the public-interest theory of regulation?

"While regulatory frameworks vary between countries,they often have common elements'.J.Godfrey,et el,'Accounting Theory',7^th Ed.p.70. Discuss some of the commonalities and differences in regulatory frameworks between Australia and the USA.

Regulatory capture has been found to be particularly pronounced in which of the following situations?

Under IAS 38 'Intangible Asset,Australian companies are permitted to carry forward existing intangible asset values at 1 January 2005.

Introduction

Accounting Theory Construction

Theory Underpinning Accounting Standards

Measurement

Accounting Measurement Systems

Assets

Liabilities and Owners Equity

Revenue

Expenses

Positive Theory of Accounting Policy and Disclosure

Capital Market Research

Behavioural Research

Emerging Issues in Accounting and Auditing

Filters

Exam 3: Role of Theory in Accounting Regulation

Proponents of the free-market approach to the provision of accounting information advocate that:

Which of these statements in relation to the regulation of auditors is not true?

In which of these countries does taxation law have the greatest influence on financial accounting?

In the application of agency theory to accounting the principals most often considered are investors and lenders and the agents most usually considered are managers.

Explain why,with the adoption of IFRS by the EU in 2005,each member state was required to set up an independent enforcement body.Do you agree that such a body is a necessary part of an overall system for enforcement of financial reporting requirements?

In 2008 the SEC agreed to permit foreign registrants to file accounts that follow international accounting standards without reconciliation with US GAAP.

The IASB sets standards for the private and the public sectors.

International Standards on Auditing (ISA)are developed by the IASB.

Atkinson and Feltham state that agency theory mainly concentrates on the demand for information for the decision-making purposes.

Which of these theories could explain a move towards government control of accounting standards setting in Australia?

Which of these is a criticism of the public interest theory of accounting regulation?

International standard setting is now dominated by the IASB and the FASB.

Who challenged the public-interest and regulatory capture theorists' view that regulation is a result of government response to rectify inefficiency?

A limitation of theories of regulation such as public interest theory and capture theory is that they are not mutually exclusive.

The IASB sets standards for:

Which of these is not an assumption underlying the public-interest theory of regulation?

"While regulatory frameworks vary between countries,they often have common elements'.J.Godfrey,et el,'Accounting Theory',7th Ed.p.70. Discuss some of the commonalities and differences in regulatory frameworks between Australia and the USA.

Regulatory capture has been found to be particularly pronounced in which of the following situations?

Under IAS 38 'Intangible Asset,Australian companies are permitted to carry forward existing intangible asset values at 1 January 2005.

Introduction

Accounting Theory Construction

Theory Underpinning Accounting Standards

Measurement

Accounting Measurement Systems

Assets

Liabilities and Owners Equity

Revenue

Expenses

Positive Theory of Accounting Policy and Disclosure

Capital Market Research

Behavioural Research

Emerging Issues in Accounting and Auditing

Filters

"While regulatory frameworks vary between countries,they often have common elements'.J.Godfrey,et el,'Accounting Theory',7^th Ed.p.70. Discuss some of the commonalities and differences in regulatory frameworks between Australia and the USA.