Question 1

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 C

Question 2

Accounting concepts have largely evolved from practical operating necessities, including income tax laws.

Accepted Answer

A) True 
 B)False  True

Question 3

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 point is at the point of sale. Other possibilities may arise, however, such as the firm's "critical event." The critical event is the operation function that is the most crucial in terms of the earning process. However, ARS 3 states that revenue is earned by the entire process of operations of the firm rather than at one point only.
The conceptual framework of the FASB states that revenue recognition occurs in accordance with two criteria: (1) the assets to be received from the performance of the revenue function are realized or realizable; and (2) performance of the revenue function is "substantially accomplished" (earned). Realized means that the firm's product or service has been converted to cash or claims to cash, while realizable has been defined as the ability to convert assets already received or held into known amounts of cash or claims to cash.

Question 4

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 5

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 6

Which of the following is 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 7

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

Question 8

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 9

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 10

Proprietary theory assumes that the owners and the firm are virtually identical.

Accepted Answer

A) True 
 B)False

Question 11

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 12

What is the going-concern postulate of ARS 1, and how has it been criticized?

Accepted Answer

The going-concern postulate states that

Question 13

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 14

Distinguish between proprietary theory and entity theory. Include descriptions of the balance sheet equation used by each and how income is computed.

Accepted Answer

Proprietary theory assumes that the owne

Question 15

Who are residual equity holders?

Accepted Answer

A)  Preferred stockholders 
B)  Managers 
C)  Bondholders 
D)  Common stockholders 
A)  Preferred stockholders 
B)  Managers 
C)  Bondholders 
D)  Common stockholders

Question 16

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

Accepted Answer

A) True 
 B)False

Question 17

Which of the following concepts focuses on preparers of financial information?

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 18

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 19

Distinguish between a postulate and a principle as they are used in ARS 1 and ARS 3. Identify the major categories of each that are included in these two studies.

Accepted Answer

Postulates are basic assumptions concern

Question 20

Which of the following is 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.

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

Accounting concepts have largely evolved from practical operating necessities, including income tax laws.

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

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

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

Which of the following is not true regarding the imperatives of ARS 1?

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

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

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

Proprietary theory assumes that the owners and the firm are virtually identical.

Which of the following statements is true regarding ARS 3?

What is the going-concern postulate of ARS 1, and how has it been criticized?

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

Distinguish between proprietary theory and entity theory. Include descriptions of the balance sheet equation used by each and how income is computed.

Who are residual equity holders?

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

Which of the following concepts focuses on preparers of financial information?

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.

Distinguish between a postulate and a principle as they are used in ARS 1 and ARS 3. Identify the major categories of each that are included in these two studies.

Which of the following is not a possible outcome of postulate C-4, stability of the monetary unit?

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

Statements of Cash Flows

Accounting for Inflation and Changing Prices

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 the basic postulates underlying historical costing?

Accounting concepts have largely evolved from practical operating necessities, including income tax laws.

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

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

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

Which of the following is not true regarding the imperatives of ARS 1?

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

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

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

Proprietary theory assumes that the owners and the firm are virtually identical.

Which of the following statements is true regarding ARS 3?

What is the going-concern postulate of ARS 1, and how has it been criticized?

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

Distinguish between proprietary theory and entity theory. Include descriptions of the balance sheet equation used by each and how income is computed.

Who are residual equity holders?

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

Which of the following concepts focuses on preparers of financial information?

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.

Distinguish between a postulate and a principle as they are used in ARS 1 and ARS 3. Identify the major categories of each that are included in these two studies.

Which of the following is not a possible outcome of postulate C-4, stability of the monetary unit?

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

Statements of Cash Flows

Accounting for Inflation and Changing Prices

Income Taxes and Financial Accounting

Pensions and Other Postretirement Benefits

Leases

Intercorporate Equity Investments

Filters