Question 1

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

Accepted Answer

A) True 
 B)False

Question 2

Which of the following is a true statement?

Accepted Answer

A)  A principle contains elements observable by empirical techniques. 
B)  The APB's Special Committee on Research Program defined both postulates and broad principles. 
C)  A principle is an analytical statement whose truth or falsity is self-contained by its internal logic. 
D)  Postulates are generally defined as basic assumptions that cannot be verified. 
A)  A principle contains elements observable by empirical techniques. 
B)  The APB's Special Committee on Research Program defined both postulates and broad principles. 
C)  A principle is an analytical statement whose truth or falsity is self-contained by its internal logic. 
D)  Postulates are generally defined as basic assumptions that cannot be verified.

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

"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 5

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

Accepted Answer

A) True 
 B)False

Question 6

Preferred stockholders are residual equity holders.

Accepted Answer

A) True 
 B)False

Question 7

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 8

Distinguish between input-oriented principles and output-oriented principles and list at least three principles in each category.

Accepted Answer

Input-oriented principles are concerned

Question 9

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

Accepted Answer

A) True 
 B)False

Question 10

The going-concern postulate states that unless there is evidence to the contrary, it is assumed that the firm will continue indefinitely.

Accepted Answer

A) True 
 B)False

Question 11

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 12

Which of the following postulates states that unless there is evidence to the contrary, it is assumed that the firm will continue indefinitely?

Accepted Answer

A)  Entities 
B)  Time period 
C)  Consistency 
D)  Going concern 
A)  Entities 
B)  Time period 
C)  Consistency 
D)  Going concern

Question 13

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

Accepted Answer

A) True 
 B)False

Question 14

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 15

Which of the following is not a criticism that has been aimed at ARS 1?

Accepted Answer

A)  Some postulates appear to stem from one of the other postulate categories. 
B)  Self-evident postulates may not be sufficiently substantive to lead to a unique and meaningful set of accounting principles. 
C)  The postulates are necessary but not sufficient to lead to a viable outcome. 
D)  Postulates should have played a less passive role. 
A)  Some postulates appear to stem from one of the other postulate categories. 
B)  Self-evident postulates may not be sufficiently substantive to lead to a unique and meaningful set of accounting principles. 
C)  The postulates are necessary but not sufficient to lead to a viable outcome. 
D)  Postulates should have played a less passive role.

Question 16

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 17

Under entity theory, creditors are considered equity holders.

Accepted Answer

A) True 
 B)False

Question 18

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 19

The time period idea is somewhat artificial because it creates definite segments out of what is a continuing process.

Accepted Answer

A) True 
 B)False

Question 20

Principles are basic assumptions concerning the business environment.

Accepted Answer

A) True 
 B)False

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

Which of the following is a true statement?

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

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

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

Preferred stockholders are residual equity holders.

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

Distinguish between input-oriented principles and output-oriented principles and list at least three principles in each category.

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

The going-concern postulate states that unless there is evidence to the contrary, it is assumed that the firm will continue indefinitely.

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

Which of the following postulates states that unless there is evidence to the contrary, it is assumed that the firm will continue indefinitely?

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

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

Which of the following is not a criticism that has been aimed at ARS 1?

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

Under entity theory, creditors are considered equity holders.

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

The time period idea is somewhat artificial because it creates definite segments out of what is a continuing process.

Principles are basic assumptions concerning the business environment.

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

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

Which of the following is a true statement?

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

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

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

Preferred stockholders are residual equity holders.

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

Distinguish between input-oriented principles and output-oriented principles and list at least three principles in each category.

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

The going-concern postulate states that unless there is evidence to the contrary, it is assumed that the firm will continue indefinitely.

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

Which of the following postulates states that unless there is evidence to the contrary, it is assumed that the firm will continue indefinitely?

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

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

Which of the following is not a criticism that has been aimed at ARS 1?

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

Under entity theory, creditors are considered equity holders.

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

The time period idea is somewhat artificial because it creates definite segments out of what is a continuing process.

Principles are basic assumptions concerning the business environment.

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