Question 1

Disclosure will become less important in the future because of market efficiency.

Accepted Answer

A) True 
 B)False  False

Question 2

Which of the following is the key group in Moonitz's set of postulates?

Accepted Answer

A) The Environmental group 
B) The Imperatives 
C) The Economic group 
D) Postulates stemming from accounting itself 
A) The Environmental group 
B) The Imperatives 
C) The Economic group 
D) Postulates stemming from accounting itself B

Question 3

Discuss the matching principle and how it applies to recognizing expenses. Why is the matching principle currently under attack?

Accepted Answer

Expenses are costs that expire as a result of generating revenues. Some expenses can be directly identified with either specific revenue or specific time periods. However, many important expenses cannot be so identified. The process of recognizing cost expiration for categories such as depreciation, cost of good sold, interest, and deferred charges is called matching. Matching implies that expenses are being recognized on a fair and equitable basis relative to the recognition of revenues.
Matching is currently under attack because the historical cost approach often tends to substantially understate expense measurements relative to the value of expired-asset services. Also the systematic and rational methods employed under GAAP tend to be extremely arbitrary.

Question 4

Discuss the revenue recognition principle and how the terms "critical event," "earned," "realized," and "realizable" apply to revenue recognition.

Accepted Answer

The most prevalent revenue recognition p

Question 5

Which of the following are defined in the text as basic assumptions concerning the business environment?

Accepted Answer

A) Concepts 
B) Principles 
C) Postulates 
D) Axioms 
A) Concepts 
B) Principles 
C) Postulates 
D) Axioms

Question 6

Postulates are generally defined as basic assumptions that cannot be verified.

Accepted Answer

A) True 
 B)False

Question 7

Under entity theory, creditors are considered equity holders.

Accepted Answer

A) True 
 B)False

Question 8

Which of the following theories assumes that the firm and its owners are separate beings?

Accepted Answer

A) Residual equity theory 
B) Proprietary theory 
C) Entity theory 
D) Commander theory 
A) Residual equity theory 
B) Proprietary theory 
C) Entity theory 
D) Commander theory

Question 9

Which of the following concepts applies to users of financial statements?

Accepted Answer

A) Comparability 
B) Consistency 
C) Uniformity 
D) Both b and c 
A) Comparability 
B) Consistency 
C) Uniformity 
D) Both b and c

Question 10

Consistency refers to the degree of reliability users should find in financial statements when evaluating financial condition or the results of operations on an interfirm basis or predicting income or cash flows.

Accepted Answer

A) True 
 B)False

Question 11

Which of the following is $\underline{not}$ true regarding the imperatives of ARS 1?

Accepted Answer

A) They are normative in nature. 
B) They have developed within the context of accounting practice. 
C) They are objectives that should be striven for. 
D) The key imperative postulate appears to be consistency. 
A) They are normative in nature. 
B) They have developed within the context of accounting practice. 
C) They are objectives that should be striven for. 
D) The key imperative postulate appears to be consistency.

Question 12

What were the reasons for the failure of ARS 1 and ARS 3?

Accepted Answer

ARS 1 and ARS 3 failed for several reaso

Question 13

Which of the following statements is true regarding ARS 3?

Accepted Answer

A) One of its principles states that revenue is earned by the entire process of operations of the firm rather than at the point of sale. 
B) All of its principles were derived from the postulates of ARS 1. 
C) The asset valuation measures prescribed are additive. 
D) One of the main criticisms aimed at ARS 3 relates to its advocating the exit-value approach to asset valuation. 
A) One of its principles states that revenue is earned by the entire process of operations of the firm rather than at the point of sale. 
B) All of its principles were derived from the postulates of ARS 1. 
C) The asset valuation measures prescribed are additive. 
D) One of the main criticisms aimed at ARS 3 relates to its advocating the exit-value approach to asset valuation.

Question 14

One reason ARS 1 and ARS 3 fell short of the goal of obtaining a framework for APB accounting opinions is that the accounting profession refused to abandon historical cost.

Accepted Answer

A) True 
 B)False

Question 15

Which of the following is not true regarding the time period postulate?

Accepted Answer

A) It results in an artificial segmentation of a continuing process. 
B) It has led to accrual accounting. 
C) It allows different accounting methods to be followed in interim periods. 
D) It allows interim reports to include estimates of annual amounts. 
A) It results in an artificial segmentation of a continuing process. 
B) It has led to accrual accounting. 
C) It allows different accounting methods to be followed in interim periods. 
D) It allows interim reports to include estimates of annual amounts.

Question 16

Which of the following are the basic postulates underlying historical costing?

Accepted Answer

A) Going Concern, Time Period, Market Prices, Monetary Unit 
B) Objectivity, Time Period, Accounting Entity, Monetary Unit 
C) Going Concern, Time Period, Accounting Entity, Monetary Unit 
D) Going Concern, Time Period, Financial Statements, Monetary Unit 
A) Going Concern, Time Period, Market Prices, Monetary Unit 
B) Objectivity, Time Period, Accounting Entity, Monetary Unit 
C) Going Concern, Time Period, Accounting Entity, Monetary Unit 
D) Going Concern, Time Period, Financial Statements, Monetary Unit

Question 17

The balance sheet equation for entity theory is "Total Assets - Total Liabilities = Owners' Equities."

Accepted Answer

A) True 
 B)False

Question 18

Under which of the following theories would the accounting equation be Total Assets - Total Liabilities = Owners' Equities?

Accepted Answer

A) Residual equity theory 
B) Proprietary theory 
C) Entity theory 
D) Commander theory 
A) Residual equity theory 
B) Proprietary theory 
C) Entity theory 
D) Commander theory

Question 19

The key group in Moonitz's set of postulates consists of postulates stemming from accounting itself.

Accepted Answer

A) True 
 B)False

Question 20

Conservatism, materiality, and disclosure are examples of constraining principles.

Accepted Answer

A) True 
 B)False

Disclosure will become less important in the future because of market efficiency.

Which of the following is the key group in Moonitz's set of postulates?

Discuss the matching principle and how it applies to recognizing expenses. Why is the matching principle currently under attack?

Discuss the revenue recognition principle and how the terms "critical event," "earned," "realized," and "realizable" apply to revenue recognition.

Which of the following are defined in the text as basic assumptions concerning the business environment?

Postulates are generally defined as basic assumptions that cannot be verified.

Under entity theory, creditors are considered equity holders.

Which of the following theories assumes that the firm and its owners are separate beings?

Which of the following concepts applies to users of financial statements?

Consistency refers to the degree of reliability users should find in financial statements when evaluating financial condition or the results of operations on an interfirm basis or predicting income or cash flows.

Which of the following is $\underline{not}$ true regarding the imperatives of ARS 1?

What were the reasons for the failure of ARS 1 and ARS 3?

Which of the following statements is true regarding ARS 3?

One reason ARS 1 and ARS 3 fell short of the goal of obtaining a framework for APB accounting opinions is that the accounting profession refused to abandon historical cost.

Which of the following is not true regarding the time period postulate?

Which of the following are the basic postulates underlying historical costing?

The balance sheet equation for entity theory is "Total Assets - Total Liabilities = Owners' Equities."

Under which of the following theories would the accounting equation be Total Assets - Total Liabilities = Owners' Equities?

The key group in Moonitz's set of postulates consists of postulates stemming from accounting itself.

Conservatism, materiality, and disclosure are examples of constraining principles.

An Introduction to Accounting Theory

Accounting Theory and Accounting Research

Development of Institutional Structure of Financial Accounting

The Economics of Financial Reporting Regulation

The Search for Objectives

The Fasbs Conceptual Framework

Usefulness of Accounting Information to Investors and Creditors

Uniformity and Disclosure: Some Policy-Making Directions

International Accounting

The Balance Sheet

The Income Statement

Statement of Cash Flows

Income Taxes and Financial Accounting

Pensions and Other Postretirement Benefits

Leases

Intercorporate Equity Investments

Filters

Exam 5: Postulates, Principles, and Concepts

Disclosure will become less important in the future because of market efficiency.

Which of the following is the key group in Moonitz's set of postulates?

Discuss the matching principle and how it applies to recognizing expenses. Why is the matching principle currently under attack?

Discuss the revenue recognition principle and how the terms "critical event," "earned," "realized," and "realizable" apply to revenue recognition.

Which of the following are defined in the text as basic assumptions concerning the business environment?

Postulates are generally defined as basic assumptions that cannot be verified.

Under entity theory, creditors are considered equity holders.

Which of the following theories assumes that the firm and its owners are separate beings?

Which of the following concepts applies to users of financial statements?

Consistency refers to the degree of reliability users should find in financial statements when evaluating financial condition or the results of operations on an interfirm basis or predicting income or cash flows.

Which of the following is not‾\underline{not}not​ true regarding the imperatives of ARS 1?

What were the reasons for the failure of ARS 1 and ARS 3?

Which of the following statements is true regarding ARS 3?

One reason ARS 1 and ARS 3 fell short of the goal of obtaining a framework for APB accounting opinions is that the accounting profession refused to abandon historical cost.

Which of the following is not true regarding the time period postulate?

Which of the following are the basic postulates underlying historical costing?

The balance sheet equation for entity theory is "Total Assets - Total Liabilities = Owners' Equities."

Under which of the following theories would the accounting equation be Total Assets - Total Liabilities = Owners' Equities?

The key group in Moonitz's set of postulates consists of postulates stemming from accounting itself.

Conservatism, materiality, and disclosure are examples of constraining principles.

An Introduction to Accounting Theory

Accounting Theory and Accounting Research

Development of Institutional Structure of Financial Accounting

The Economics of Financial Reporting Regulation

The Search for Objectives

The Fasbs Conceptual Framework

Usefulness of Accounting Information to Investors and Creditors

Uniformity and Disclosure: Some Policy-Making Directions

International Accounting

The Balance Sheet

The Income Statement

Statement of Cash Flows

Income Taxes and Financial Accounting

Pensions and Other Postretirement Benefits

Leases

Intercorporate Equity Investments

Filters

Which of the following is $\underline{not}$ true regarding the imperatives of ARS 1?