Question 1

During the normative period of accounting theory development,theorists were concerned with explaining and understanding current accounting practice.

Accepted Answer

A) True 
 B)False  False

Question 2

Which of these is one of the two main factors that prompted the demise of the normative period of accounting research?

Accepted Answer

A) The availability of financial economic principles and testing methods 
B) Severe criticisms from positive accounting theorists 
C) The resurgence of behavioural research 
D) The increased popularity of a conceptual framework 
A) The availability of financial economic principles and testing methods 
B) Severe criticisms from positive accounting theorists 
C) The resurgence of behavioural research 
D) The increased popularity of a conceptual framework A

Question 3

'The positive and normative approaches to accounting theory are not incompatible.' Explain and discuss.

Accepted Answer

The positive and normative approaches to accounting theory are not necessarily incompatible, as they serve different purposes and can complement each other in understanding and improving accounting practices.

The positive approach to accounting theory focuses on describing and explaining how accounting practices are currently being used in the real world. It seeks to understand the reasons behind certain accounting methods and the impact they have on financial reporting. This approach is based on empirical evidence and aims to provide a factual analysis of accounting practices.

On the other hand, the normative approach to accounting theory is concerned with evaluating and recommending what accounting practices should be. It is based on ethical and moral considerations, as well as the desired goals of financial reporting. This approach aims to provide guidance on how accounting practices can be improved to better serve the needs of users and stakeholders.

While these two approaches may seem contradictory at first glance, they can actually work together to provide a more comprehensive understanding of accounting theory. The positive approach can provide the necessary data and evidence to inform the normative approach, while the normative approach can provide guidance on how to interpret and use the findings of the positive approach.

For example, the positive approach may reveal that certain accounting practices are being used in a way that leads to misleading financial statements. The normative approach can then provide recommendations on how to improve these practices to ensure more accurate and transparent financial reporting.

In conclusion, the positive and normative approaches to accounting theory can be seen as complementary rather than incompatible. By using both approaches, we can gain a better understanding of current accounting practices and work towards improving them to better serve the needs of users and stakeholders.

Question 4

The statement that best defines the term 'empirical analysis' is:

Accepted Answer

A) Reasoning from the general to specific statements 
B) Testing the truth of a proposition by observing a subset of real world observations or events 
C) Understanding practices,activities or behaviour based upon direct observations and/or experience 
D) Actions undertaken by interested parties to influence the actions or outcomes of decisions made by others 
A) Reasoning from the general to specific statements 
B) Testing the truth of a proposition by observing a subset of real world observations or events 
C) Understanding practices,activities or behaviour based upon direct observations and/or experience 
D) Actions undertaken by interested parties to influence the actions or outcomes of decisions made by others

Question 5

The two groups that dominated the normative period of accounting theory development were:

Accepted Answer

A) The proponents of historical cost accounting and the conceptual framework proponents 
B) The critics of historical cost accounting and the conceptual framework opponents 
C) The proponents of historical cost accounting and the conceptual framework opponents 
D) The critics of historical cost accounting and the conceptual framework proponents 
A) The proponents of historical cost accounting and the conceptual framework proponents 
B) The critics of historical cost accounting and the conceptual framework opponents 
C) The proponents of historical cost accounting and the conceptual framework opponents 
D) The critics of historical cost accounting and the conceptual framework proponents

Question 6

The development of a conceptual framework has solved the problem of inconsistency in the application of accounting in practice.

Accepted Answer

A) True 
 B)False

Question 7

The statement that best defines what is meant by a theory is:

Accepted Answer

A) A coherent set of hypothetical,conceptual and pragmatic principles forming the general framework for a field of inquiry 
B) A deductive system of statements of decreasing generality 
C) A set of ideas used to explain real-world observations 
D) All of the above 
A) A coherent set of hypothetical,conceptual and pragmatic principles forming the general framework for a field of inquiry 
B) A deductive system of statements of decreasing generality 
C) A set of ideas used to explain real-world observations 
D) All of the above

Question 8

The statement that best describes the interaction of academic and professional research interests with respect to accounting theory,is:

Accepted Answer

A) Academic and professional research interests are incompatible as academic research centres on positive theories which are not prescriptive 
B) Academic researchers use positive accounting theories whereas the accounting profession uses normative theories 
C) While accounting profession researchers seek normative (prescriptive)theories for accounting practice,these theories are not incompatible with academic (positive)theories which can be used to advise accounting professionals in the development of prescriptive practices 
D) None of the above 
A) Academic and professional research interests are incompatible as academic research centres on positive theories which are not prescriptive 
B) Academic researchers use positive accounting theories whereas the accounting profession uses normative theories 
C) While accounting profession researchers seek normative (prescriptive)theories for accounting practice,these theories are not incompatible with academic (positive)theories which can be used to advise accounting professionals in the development of prescriptive practices 
D) None of the above

Question 9

Behavioural research,which is concerned with the broader sociological implications of accounting numbers and the associated actions of 'key players' as they react to accounting information,was first used in an accounting context in the 1980s.

Accepted Answer

A) True 
 B)False

Question 10

"Many accounting prescriptions on how to account were developed to resolve problems as they arose. ,hence the theory underlying those prescriptions also developed in a largely unstructured manner.This has led to inconsistencies in practice".J.Godfrey,et el,'Accounting Theory',7th Ed.p.5.Discuss the quotation,including in your discussion at least three examples of inconsistencies in accounting practice.

Accepted Answer

The quotation highlights the evolution o

Question 11

Which of these characteristics is the least important for an accounting theory to be considered acceptable?

Accepted Answer

A) How well the accounting theory has been constructed 
B) How acceptable the implications of the accounting theory are 
C) How prescriptive the accounting theory is in relation to accounting practice 
D) How well the accounting theory explains and predicts reality 
A) How well the accounting theory has been constructed 
B) How acceptable the implications of the accounting theory are 
C) How prescriptive the accounting theory is in relation to accounting practice 
D) How well the accounting theory explains and predicts reality

Question 12

The period 1800 - 1955 has been labelled the empirical period in accounting development.

Accepted Answer

A) True 
 B)False

Question 13

Select the pair of periods of accounting theoretical development that are based on a similar approach.

Accepted Answer

A) The general scientific and the positive periods 
B) The normative and positive periods 
C) The general scientific and the normative periods 
D) None of the above 
A) The general scientific and the positive periods 
B) The normative and positive periods 
C) The general scientific and the normative periods 
D) None of the above

Question 14

The rapid increase in demand for both management accounting and financial accounting information in the 1800s can be explained by:

Accepted Answer

A) The rapid development of technology during this time 
B) The 'birth' of the corporation 
C) Increasing separation of business management from ownership 
D) All of the above 
A) The rapid development of technology during this time 
B) The 'birth' of the corporation 
C) Increasing separation of business management from ownership 
D) All of the above

Question 15

Give a brief overview of the development of accounting theory in:
.the pragmatic period (1800-1955)
.the normative period (1956-1970)
.the positive period (1970's-2000 )

Accepted Answer

The pragmatic period of accounting theor

Question 16

The ultimate objective of international accounting standards is to make all countries use the same standards so that there are no differences in reported information across international reporting boundaries.

Accepted Answer

A) True 
 B)False

Question 17

The research question that is most unlikely to be tested using positive methodology is:

Accepted Answer

A) Which firms are more likely to use straight-line depreciation rather than diminishing-balance depreciation? 
B) Is the quantitative data derived from given sets of operations,based on an overall accounting theory,useful to users of financial statements? 
C) How do changes in tax rules affect a firm's leverage position? 
D) Are firms with more intangible assets more likely to repurchase their shares? 
A) Which firms are more likely to use straight-line depreciation rather than diminishing-balance depreciation? 
B) Is the quantitative data derived from given sets of operations,based on an overall accounting theory,useful to users of financial statements? 
C) How do changes in tax rules affect a firm's leverage position? 
D) Are firms with more intangible assets more likely to repurchase their shares?

Question 18

Which of these is an era of accounting theory development during which the emphasis was on providing an overall framework to explain and develop accounting practice by using the empirical analysis method?

Accepted Answer

A) The general scientific period 
B) The pre-scientific period 
C) The practical approach period 
D) The normative period 
A) The general scientific period 
B) The pre-scientific period 
C) The practical approach period 
D) The normative period

Question 19

The major focus of the normative accounting theories during the period 1956 - 1970 was:

Accepted Answer

A) Refining accounting practices 
B) The impact of changing prices on the value of assets and the calculation of profit 
C) Providing explanations of accounting practices 
D) The broader sociological implications of accounting numbers 
A) Refining accounting practices 
B) The impact of changing prices on the value of assets and the calculation of profit 
C) Providing explanations of accounting practices 
D) The broader sociological implications of accounting numbers

Question 20

In which of the following situations would you probably not apply a behavioural theory if you wanted to undertake accounting research?

Accepted Answer

A) You want to know whether investors use disclosures when deciding whether to invest in a firm 
B) You are interested in understanding the effect of unexpected earnings announcements by firms on share prices 
C) You want to know what factors loan managers consider when assessing the riskiness of a new client firm 
D) You want to determine whether individuals are quicker at analysing financial information using graphs or tables 
A) You want to know whether investors use disclosures when deciding whether to invest in a firm 
B) You are interested in understanding the effect of unexpected earnings announcements by firms on share prices 
C) You want to know what factors loan managers consider when assessing the riskiness of a new client firm 
D) You want to determine whether individuals are quicker at analysing financial information using graphs or tables

During the normative period of accounting theory development,theorists were concerned with explaining and understanding current accounting practice.

Which of these is one of the two main factors that prompted the demise of the normative period of accounting research?

'The positive and normative approaches to accounting theory are not incompatible.' Explain and discuss.

The statement that best defines the term 'empirical analysis' is:

The two groups that dominated the normative period of accounting theory development were:

The development of a conceptual framework has solved the problem of inconsistency in the application of accounting in practice.

The statement that best defines what is meant by a theory is:

The statement that best describes the interaction of academic and professional research interests with respect to accounting theory,is:

Behavioural research,which is concerned with the broader sociological implications of accounting numbers and the associated actions of 'key players' as they react to accounting information,was first used in an accounting context in the 1980s.

Which of these characteristics is the least important for an accounting theory to be considered acceptable?

The period 1800 - 1955 has been labelled the empirical period in accounting development.

Select the pair of periods of accounting theoretical development that are based on a similar approach.

The rapid increase in demand for both management accounting and financial accounting information in the 1800s can be explained by:

Give a brief overview of the development of accounting theory in: .the pragmatic period (1800-1955) .the normative period (1956-1970) .the positive period (1970's-2000 )

The ultimate objective of international accounting standards is to make all countries use the same standards so that there are no differences in reported information across international reporting boundaries.

The research question that is most unlikely to be tested using positive methodology is:

Which of these is an era of accounting theory development during which the emphasis was on providing an overall framework to explain and develop accounting practice by using the empirical analysis method?

The major focus of the normative accounting theories during the period 1956 - 1970 was:

In which of the following situations would you probably not apply a behavioural theory if you wanted to undertake accounting research?

Accounting Theory Construction

Role of Theory in Accounting Regulation

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 1: Introduction

During the normative period of accounting theory development,theorists were concerned with explaining and understanding current accounting practice.

Which of these is one of the two main factors that prompted the demise of the normative period of accounting research?

'The positive and normative approaches to accounting theory are not incompatible.' Explain and discuss.

The statement that best defines the term 'empirical analysis' is:

The two groups that dominated the normative period of accounting theory development were:

The development of a conceptual framework has solved the problem of inconsistency in the application of accounting in practice.

The statement that best defines what is meant by a theory is:

The statement that best describes the interaction of academic and professional research interests with respect to accounting theory,is:

Behavioural research,which is concerned with the broader sociological implications of accounting numbers and the associated actions of 'key players' as they react to accounting information,was first used in an accounting context in the 1980s.

Which of these characteristics is the least important for an accounting theory to be considered acceptable?

The period 1800 - 1955 has been labelled the empirical period in accounting development.

Select the pair of periods of accounting theoretical development that are based on a similar approach.

The rapid increase in demand for both management accounting and financial accounting information in the 1800s can be explained by:

Give a brief overview of the development of accounting theory in: .the pragmatic period (1800-1955) .the normative period (1956-1970) .the positive period (1970's-2000 )

The ultimate objective of international accounting standards is to make all countries use the same standards so that there are no differences in reported information across international reporting boundaries.

The research question that is most unlikely to be tested using positive methodology is:

Which of these is an era of accounting theory development during which the emphasis was on providing an overall framework to explain and develop accounting practice by using the empirical analysis method?

The major focus of the normative accounting theories during the period 1956 - 1970 was:

In which of the following situations would you probably not apply a behavioural theory if you wanted to undertake accounting research?

Accounting Theory Construction

Role of Theory in Accounting Regulation

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