Question 1

Which of the following are defined in the text as broad rules that guide the accounting function?

Accepted Answer

A) Input-oriented principles 
B) Output-oriented principles 
C) Basic principles 
D) Axioms 
A) Input-oriented principles 
B) Output-oriented principles 
C) Basic principles 
D) Axioms

Question 2

ARS 1 and ARS 4 represent a milestone in the attempt to provide a unified theoretical underpinning for financial accounting rules by the APB.

Accepted Answer

A) True 
 B)False

Question 3

_________ refers to the importance of an item to financial statement users in terms of its relevance to decision-making.

Accepted Answer

A) Comparability 
B) Materiality 
C) Consistency 
D) Objectivity 
A) Comparability 
B) Materiality 
C) Consistency 
D) Objectivity

Question 4

The key imperative postulate in ARS 1 appears to be stability of the monetary unit.

Accepted Answer

A) True 
 B)False

Question 5

Which type of accounting principle is concerned with general approaches or rules for preparing financial statements and their content?

Accepted Answer

A) Input-oriented principles 
B) Output-oriented principles 
C) Constraining principles 
D) Both a and c 
A) Input-oriented principles 
B) Output-oriented principles 
C) Constraining principles 
D) Both a and c

Question 6

Some capital markets research has indicated that "bad news" relative to reported earnings has a greater impact upon security prices than "good news."

Accepted Answer

A) True 
 B)False

Question 7

When the business is viewed in the context of accounting as well as in its legal form, it is clear that the entity is identical to its owners.

Accepted Answer

A) True 
 B)False

Question 8

Under which of the following theories would the accounting equation be Total Assets = Total Equities (including liabilities)?

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

The lower-of-cost or market valuation of inventories is an example of the disclosure principle.

Accepted Answer

A) True 
 B)False

Question 10

Which of the following is not a true statement regarding ARS 1 and ARS 3?

Accepted Answer

A) The authors were commissioned to find postulates and principles that would lead to a measure of true income. 
B) The postulates were not complete and could not exclude all value systems other than the one prescribed in the principles. 
C) The authors were able to identify a single concept of income that was superior to others. 
D) Nothing is said about the users of accounting information and what their needs and abilities might be. 
A) The authors were commissioned to find postulates and principles that would lead to a measure of true income. 
B) The postulates were not complete and could not exclude all value systems other than the one prescribed in the principles. 
C) The authors were able to identify a single concept of income that was superior to others. 
D) Nothing is said about the users of accounting information and what their needs and abilities might be.

Question 11

Which of the following is $\underline{not}$ a possible outcome of postulate C-4, stability of the monetary unit?

Accepted Answer

A) If purchasing power of the monetary unit is not stable, some form of inflation accounting is appropriate. 
B) If purchasing power of the monetary unit is not stable, historical cost is still justified. 
C) If purchasing power of the monetary unit is stable, a system of current values is justified. 
D) If purchasing power of the monetary unit is stable, retention of historical cost is justified. 
A) If purchasing power of the monetary unit is not stable, some form of inflation accounting is appropriate. 
B) If purchasing power of the monetary unit is not stable, historical cost is still justified. 
C) If purchasing power of the monetary unit is stable, a system of current values is justified. 
D) If purchasing power of the monetary unit is stable, retention of historical cost is justified.

Question 12

How is conservatism defined from a preparer's orientation? Which conservatism goal should take precedence when conservatism criteria conflict?

Accepted Answer

Conservative, from a preparer's point of

Question 13

Which of the following are defined in the text as the result of the process of identifying, classifying, and interpreting various phenomena or precepts?

Accepted Answer

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

Question 14

Which of the following is not a true statement?

Accepted Answer

A) A principle is a statement of a true and generalized nature containing referents to the real world. 
B) If a principle could be empirically tested and proven true, it would be capable of becoming a law. 
C) The truth of a law or principle means that is should not be replaced by a newer system. 
D) Principles are general statements that influence the way we view phenomena and the way we think about problems. 
A) A principle is a statement of a true and generalized nature containing referents to the real world. 
B) If a principle could be empirically tested and proven true, it would be capable of becoming a law. 
C) The truth of a law or principle means that is should not be replaced by a newer system. 
D) Principles are general statements that influence the way we view phenomena and the way we think about problems.

Question 15

Discuss the residual equity theory and its assumptions. Include a description of the accounting equation used and how income would be computed.

Accepted Answer

The residual equity theory is a variant

Question 16

"Matching" refers to the fact that all expenses can be directly identified with either specific revenues or specific time periods.

Accepted Answer

A) True 
 B)False

Question 17

Conservatism has been called the dominant principle of accounting.

Accepted Answer

A) True 
 B)False

Question 18

Which of the following is a true statement regarding Moonitz's approach to ARS 1?

Accepted Answer

A) He initially rejected an inductive type of approach. 
B) He used symbolic terminology and formal methods. 
C) He rejected a deductive approach rooted in reasoning alone. 
D) He was unconcerned about the experiential and empirical aspects of accounting. 
A) He initially rejected an inductive type of approach. 
B) He used symbolic terminology and formal methods. 
C) He rejected a deductive approach rooted in reasoning alone. 
D) He was unconcerned about the experiential and empirical aspects of accounting.

Question 19

_________ refers to a firm's use of the same accounting methods over consecutive time periods.

Accepted Answer

A) Comparability 
B) Materiality 
C) Consistency 
D) Objectivity 
A) Comparability 
B) Materiality 
C) Consistency 
D) Objectivity

Question 20

Output-oriented principles are broad rules that guide the accounting function.

Accepted Answer

A) True 
 B)False

Which of the following are defined in the text as broad rules that guide the accounting function?

ARS 1 and ARS 4 represent a milestone in the attempt to provide a unified theoretical underpinning for financial accounting rules by the APB.

_________ refers to the importance of an item to financial statement users in terms of its relevance to decision-making.

The key imperative postulate in ARS 1 appears to be stability of the monetary unit.

Which type of accounting principle is concerned with general approaches or rules for preparing financial statements and their content?

Some capital markets research has indicated that "bad news" relative to reported earnings has a greater impact upon security prices than "good news."

When the business is viewed in the context of accounting as well as in its legal form, it is clear that the entity is identical to its owners.

Under which of the following theories would the accounting equation be Total Assets = Total Equities (including liabilities)?

The lower-of-cost or market valuation of inventories is an example of the disclosure principle.

Which of the following is not a true statement regarding ARS 1 and ARS 3?

Which of the following is $\underline{not}$ a possible outcome of postulate C-4, stability of the monetary unit?

How is conservatism defined from a preparer's orientation? Which conservatism goal should take precedence when conservatism criteria conflict?

Which of the following are defined in the text as the result of the process of identifying, classifying, and interpreting various phenomena or precepts?

Which of the following is not a true statement?

Discuss the residual equity theory and its assumptions. Include a description of the accounting equation used and how income would be computed.

"Matching" refers to the fact that all expenses can be directly identified with either specific revenues or specific time periods.

Conservatism has been called the dominant principle of accounting.

Which of the following is a true statement regarding Moonitz's approach to ARS 1?

_________ refers to a firm's use of the same accounting methods over consecutive time periods.

Output-oriented principles are broad rules that guide the accounting function.

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

Which of the following are defined in the text as broad rules that guide the accounting function?

ARS 1 and ARS 4 represent a milestone in the attempt to provide a unified theoretical underpinning for financial accounting rules by the APB.

_________ refers to the importance of an item to financial statement users in terms of its relevance to decision-making.

The key imperative postulate in ARS 1 appears to be stability of the monetary unit.

Which type of accounting principle is concerned with general approaches or rules for preparing financial statements and their content?

Some capital markets research has indicated that "bad news" relative to reported earnings has a greater impact upon security prices than "good news."

When the business is viewed in the context of accounting as well as in its legal form, it is clear that the entity is identical to its owners.

Under which of the following theories would the accounting equation be Total Assets = Total Equities (including liabilities)?

The lower-of-cost or market valuation of inventories is an example of the disclosure principle.

Which of the following is not a true statement regarding ARS 1 and ARS 3?

Which of the following is not‾\underline{not}not​ a possible outcome of postulate C-4, stability of the monetary unit?

How is conservatism defined from a preparer's orientation? Which conservatism goal should take precedence when conservatism criteria conflict?

Which of the following are defined in the text as the result of the process of identifying, classifying, and interpreting various phenomena or precepts?

Which of the following is not a true statement?

Discuss the residual equity theory and its assumptions. Include a description of the accounting equation used and how income would be computed.

"Matching" refers to the fact that all expenses can be directly identified with either specific revenues or specific time periods.

Conservatism has been called the dominant principle of accounting.

Which of the following is a true statement regarding Moonitz's approach to ARS 1?

_________ refers to a firm's use of the same accounting methods over consecutive time periods.

Output-oriented principles are broad rules that guide the accounting function.

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 $\underline{not}$ a possible outcome of postulate C-4, stability of the monetary unit?