Deck 5: Theories in Accounting

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Question
Stakeholder theory accounting disclosure practice.

A) Is completely different to legitimacy theory
B) Focuses on government power
C) Has both a normative and positive version
D) All of the above
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Question
Which of the following theories have been used to explain voluntary disclosure in the annual report?

A) Stakeholder Theory
B) Legitimacy Theory
C) Institutional Theory
D) All of the above
Question
Which of the following is NOT an important role for accounting in the agency relationship?

A) Identifying excessive perquisite consumption
B) Signalling good news to the market
C) Determining performance
D) Protecting lenders' interests
Question
Agency theory would hold that managers on compensation contracts which have bonuses tied to a current measure of performance would prefer to:

A) Be indifferent to expensing or capitalising transactions
B) Expense transactions rather than capitalise them.
C) Smooth income using either expensing or capitalising.
D) Capitalise transactions rather than expense them.
Question
A positive theory

A) Is completely divorced from reality
B) Describes, explains or predicts activities
C) Is based on what should be the case given a certain objective
D) Only focuses on rewarding activities
Question
According to stakeholder theory accounting information accounting disclosure practice.

A) is seen as largely advertising
B) is unimportant to most stakeholders
C) is usually misleading
D) is an important way to communicate with stakeholders
Question
Which of the following has been identified as a problem in owner-manager relationships?

A) Short-term focus
B) Risk aversion
C) Dividend retention
D) All of the above
Question
Contingency theory proposes that accounting disclosure practice.

A) Accounting policies are likely to be consistent within industries.
B) Size is not an important factor when considering management accounting systems.
C) Shareholder needs drive accounting system choices.
D) No universally consistent accounting system can apply to all organisations.
Question
Legitimacy theory argues that disclosure practice.

A) Organisations can only continue to exist if they demonstrate values consistent with society at large.
B) Organisations should focus on wealth maximisation for their owners
C) The business of business is business
D) Consumers are only interested in minimising costs to themselves.
Question
A normative theory

A) Is completely divorced from reality
B) Describes, explains or predicts activities
C) Is based on what should be the case given a certain objective
D) Only focuses on normal activities
Question
Theories in accounting can help us to understand the decisions of:

A) Financial information preparers
B) Financial information users
C) Financial information regulators
D) All of the above
Question
The central proposition of contingency theory is: accounting disclosure practice.

A) Institutional norms drive organisational structure.
B) Organisational performance is largely random and poorly understood
C) Organisational performance depends on the fit between organisational context and structure.
D) Organisations are simply a nexus of contractual agreements.
Question
According to agency theory the following are examples of bonding costs:

A) Auditing the financial reports
B) Putting in place operating rules
C) Linking remuneration to performance
D) All of the above
Question
Accounting theory helps us understand accounting better as:

A) A fundamental part of the natural universe
B) A human endeavour
C) A random process
D) A representation of truth
Question
Which of the following is NOT one of the four ways an organisation can obtain or maintain organisational legitimacy according to Lindblom? disclosure practice.

A) Change perceptions of society, without changing its own behaviour
B) Manipulate perceptions by deflecting attention from societal concerns
C) Change its behaviour
D) None of the above, i.e. they are all ways an organisation can obtain or maintain legitimacy
Question
Which of the following is NOT considered a stakeholder according to the managerial branch of stakeholder theory? accounting disclosure practice.

A) Communities
B) Competitors
C) Customers
D) None of the above, i.e. they are all considered stakeholders
Question
A key underlying assumption of Institutional Theory is that people are:

A) Self-interested
B) Likely to conform to external norms
C) Risk-adverse
D) All of the above
Question
According to institutional theory which of the following statements is NOT true about corporate social and environmental disclosure

A) It will be heavily influenced by regulation
B) Well organised external stakeholders will lead to increased disclosure
C) Within industries the nature of the disclosure is likely to diverge over time
D) None of the above, i.e. they are all true.
Question
Which of these is NOT an assumption on which positive accounting theory is based?

A) People are rational
B) People are wealth maximisers
C) People prefer to act altruistically
D) None of the above, i.e. they are all assumptions of positive accounting theory?
Question
Which of the following has been identified as a problem in owner-lender relationships?

A) Dividend retention
B) Asset substitution
C) Over-investment
D) All of the above
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Deck 5: Theories in Accounting
1
Stakeholder theory accounting disclosure practice.

A) Is completely different to legitimacy theory
B) Focuses on government power
C) Has both a normative and positive version
D) All of the above
C
2
Which of the following theories have been used to explain voluntary disclosure in the annual report?

A) Stakeholder Theory
B) Legitimacy Theory
C) Institutional Theory
D) All of the above
D
3
Which of the following is NOT an important role for accounting in the agency relationship?

A) Identifying excessive perquisite consumption
B) Signalling good news to the market
C) Determining performance
D) Protecting lenders' interests
A
4
Agency theory would hold that managers on compensation contracts which have bonuses tied to a current measure of performance would prefer to:

A) Be indifferent to expensing or capitalising transactions
B) Expense transactions rather than capitalise them.
C) Smooth income using either expensing or capitalising.
D) Capitalise transactions rather than expense them.
Unlock Deck
Unlock for access to all 20 flashcards in this deck.
Unlock Deck
k this deck
5
A positive theory

A) Is completely divorced from reality
B) Describes, explains or predicts activities
C) Is based on what should be the case given a certain objective
D) Only focuses on rewarding activities
Unlock Deck
Unlock for access to all 20 flashcards in this deck.
Unlock Deck
k this deck
6
According to stakeholder theory accounting information accounting disclosure practice.

A) is seen as largely advertising
B) is unimportant to most stakeholders
C) is usually misleading
D) is an important way to communicate with stakeholders
Unlock Deck
Unlock for access to all 20 flashcards in this deck.
Unlock Deck
k this deck
7
Which of the following has been identified as a problem in owner-manager relationships?

A) Short-term focus
B) Risk aversion
C) Dividend retention
D) All of the above
Unlock Deck
Unlock for access to all 20 flashcards in this deck.
Unlock Deck
k this deck
8
Contingency theory proposes that accounting disclosure practice.

A) Accounting policies are likely to be consistent within industries.
B) Size is not an important factor when considering management accounting systems.
C) Shareholder needs drive accounting system choices.
D) No universally consistent accounting system can apply to all organisations.
Unlock Deck
Unlock for access to all 20 flashcards in this deck.
Unlock Deck
k this deck
9
Legitimacy theory argues that disclosure practice.

A) Organisations can only continue to exist if they demonstrate values consistent with society at large.
B) Organisations should focus on wealth maximisation for their owners
C) The business of business is business
D) Consumers are only interested in minimising costs to themselves.
Unlock Deck
Unlock for access to all 20 flashcards in this deck.
Unlock Deck
k this deck
10
A normative theory

A) Is completely divorced from reality
B) Describes, explains or predicts activities
C) Is based on what should be the case given a certain objective
D) Only focuses on normal activities
Unlock Deck
Unlock for access to all 20 flashcards in this deck.
Unlock Deck
k this deck
11
Theories in accounting can help us to understand the decisions of:

A) Financial information preparers
B) Financial information users
C) Financial information regulators
D) All of the above
Unlock Deck
Unlock for access to all 20 flashcards in this deck.
Unlock Deck
k this deck
12
The central proposition of contingency theory is: accounting disclosure practice.

A) Institutional norms drive organisational structure.
B) Organisational performance is largely random and poorly understood
C) Organisational performance depends on the fit between organisational context and structure.
D) Organisations are simply a nexus of contractual agreements.
Unlock Deck
Unlock for access to all 20 flashcards in this deck.
Unlock Deck
k this deck
13
According to agency theory the following are examples of bonding costs:

A) Auditing the financial reports
B) Putting in place operating rules
C) Linking remuneration to performance
D) All of the above
Unlock Deck
Unlock for access to all 20 flashcards in this deck.
Unlock Deck
k this deck
14
Accounting theory helps us understand accounting better as:

A) A fundamental part of the natural universe
B) A human endeavour
C) A random process
D) A representation of truth
Unlock Deck
Unlock for access to all 20 flashcards in this deck.
Unlock Deck
k this deck
15
Which of the following is NOT one of the four ways an organisation can obtain or maintain organisational legitimacy according to Lindblom? disclosure practice.

A) Change perceptions of society, without changing its own behaviour
B) Manipulate perceptions by deflecting attention from societal concerns
C) Change its behaviour
D) None of the above, i.e. they are all ways an organisation can obtain or maintain legitimacy
Unlock Deck
Unlock for access to all 20 flashcards in this deck.
Unlock Deck
k this deck
16
Which of the following is NOT considered a stakeholder according to the managerial branch of stakeholder theory? accounting disclosure practice.

A) Communities
B) Competitors
C) Customers
D) None of the above, i.e. they are all considered stakeholders
Unlock Deck
Unlock for access to all 20 flashcards in this deck.
Unlock Deck
k this deck
17
A key underlying assumption of Institutional Theory is that people are:

A) Self-interested
B) Likely to conform to external norms
C) Risk-adverse
D) All of the above
Unlock Deck
Unlock for access to all 20 flashcards in this deck.
Unlock Deck
k this deck
18
According to institutional theory which of the following statements is NOT true about corporate social and environmental disclosure

A) It will be heavily influenced by regulation
B) Well organised external stakeholders will lead to increased disclosure
C) Within industries the nature of the disclosure is likely to diverge over time
D) None of the above, i.e. they are all true.
Unlock Deck
Unlock for access to all 20 flashcards in this deck.
Unlock Deck
k this deck
19
Which of these is NOT an assumption on which positive accounting theory is based?

A) People are rational
B) People are wealth maximisers
C) People prefer to act altruistically
D) None of the above, i.e. they are all assumptions of positive accounting theory?
Unlock Deck
Unlock for access to all 20 flashcards in this deck.
Unlock Deck
k this deck
20
Which of the following has been identified as a problem in owner-lender relationships?

A) Dividend retention
B) Asset substitution
C) Over-investment
D) All of the above
Unlock Deck
Unlock for access to all 20 flashcards in this deck.
Unlock Deck
k this deck
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Unlock Deck
Unlock for access to all 20 flashcards in this deck.