Exam 1: An Introduction to Accounting Theory

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.

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

Which of the following would be considered a political factor relative to the financial accounting policy function?

What is the policy function performed by bodies such as the FASB and the SEC? List and discuss the three sources of inputs to the policy-making function.

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

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

For which measurement scale must the change in the attribute measured among assigned numbers be equal?

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

If a number assigned to an object is an actual measurement of a property of the object, it is referred to as a(n):

Computations and comparisons of accounting ratios is possible because:

In attempting to analyze the worth of an accounting measure, which of the following qualities is not mentioned in the text as an important consideration?

Objectivity may be defined as the degree of consensus among measurers.

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

Prediction measures are concerned with factors that may be indicative of future conditions.

Indirect measures are usually preferable to direct measures because they are less costly to obtain.

FIFO and LIFO measures of cost of goods sold and inventories are examples of calculations rather than measurements.

Identify four qualities that are pertinent to accounting measures.

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

The simplest type of measuring system is the nominal scale.