Exam 1: An Introduction to Accounting Theory

Which of the following valuation approaches has/have been defended as more suitable as a means for distributing income because it is not based on hypothetical opportunity cost figures?

Accounting theory is developed and refined by the process of accounting research.

Which of the following is not a major input into the accounting standard-setting process?

A general price-level adjustment refers to the purchasing power of the monetary unitary unit relative to all goods and services in the economy.

In a ratio scale, the zero point implies "nothingness," or the absence of the quality being measured.

When a direct assessment measure is used, there is always only one correct measure.

Of the valuation systems discussed in your text, which one is purely theoretical, with virtually no operable practicability on a statement-wide basis?

Calculations attempt to simulate or come as close as possible to the measurement of real phenomena or attributes.

Which measurement scale indicates an order of preference but not the degree of preference among ranks?

Using ratio scale, measurement is possible in accounting.

Computations and comparisons of accounting ratios is possible because:

The terms calculation and measurement both refer to the valuation of a real phenomena or attribute.

Numerals assigned in ordinal rankings indicate an order of preference where the degree of preference among ranks is the same.

The need for information on a timely basis may conflict with cost constraints in some situations.

Replacement cost as a measure of asset value is generally more reliable than historical cost.

Which of the following methods of valuing an asset is based on the amount that a firm could acquire by selling the asset?

Which of the following valuation approaches converts historical cost dollars by an index such as the Consumer Price Index?

Financial accounting refers to accounting information that is used by management for decision-making purposes.

The simplest type of measuring system is the nominal scale.

The simplest type of measuring system is the: