Acct Theory Fall Midterm Questions
and Answers 2025\2026 Updated and
Verified.
Some accountants maintain that accounting standards are as much a product of political action
as they are of careful logic or empirical findings. This belief is an example of the concept of -
Answer Standard setting as apolitical process
Which of the following was not a criticism of the development of accounting standards by the
Accounting Principles Board? - Answer Harmonization. The accounting standards developed
were dissimilar to those developed by the International Accounting Standards Committee
Which of the following types of pronouncements were intended to establish the objectives and
concepts that the FASB will use in developing standards of financial accounting and reporting? -
Answer Statements of Financial Accounting Concepts (SFAC)
Which of the following companies was involved in an accounting failure that caused the public
accounting firm Arthur Andersen to gout of business? - Answer Enron
Which of the following bodies has the ultimate authority to issue accounting pronouncements
in the United States? - Answer Securities and Exchange Commission
Who has been given credit or developing the double-entry system of bookkeeping? - Answer
Fra Luca Pacioli
Which of the following is considered a constraint by Statement of Financial Accounting Concepts
No. 8? - Answer Cost
Under Statement of Financial Accounting Concepts No. 8, which of the following is an ingredient
of the primary quality of faithful representation? - Answer Completeness
Which early accounting theorist was among the first to express the view that all changes in the
value of assets and liabilities should be reflected in the financial statements? - Answer William
Paton
, Which of the following committees recommended abolishing the Accounting Principles Board
and replacing it with the Financial Accounting Board? - Answer Wheat
Under Statement of Financial Accounting Concepts No. 8, which of the following is not a
qualitative characteristic associated with faithful representation? - Answer Predictive value
Under Statement of Financial Accounting Concepts No. 8, which of the following is an ingredient
of the primary quality of relevance? - Answer Materiality
Theories may described as: - Answer normative and positive
The purpose of Statements of Financial Accounting Concepts is to - Answer Form a conceptual
framework for solving existing and emerging problems.
According to the FASB's conceptual framework, which of the following decreases stockholder
equity? - Answer Distributions by owners
Phoenix Music Company manufactures and sells stereo systems that include an assurance-type
warranty for the first 120 days. Phoenix also offers an optional extended coverage plan under
which it will repair or replace any defective part for 2 years beyond the expiration of the
assurance-type warranty. The total transaction price for the sale of the stereo system and the
extended warranty is $2,000. The standalone price of each is $1,600 and $400, respectively. The
estimated cost of the assurance-warranty is $200. The amount assigned to the assurance
warranty as unearned warranty revenue should be - Answer $400
Which of the following is an argument for using historical cost in accounting? - Answer Fair
values are subjective
An item is considered material if - Answer It is likely to influence the decision of an investor or
creditor
Which basis of accounting is most likely to provide the best assessment of an entity's past and
future ability to generate net cash inflows? - Answer Accrual basis of accounting
According to the FASB's conceptual framework, the objective of general purpose financial
reporting is based on: - Answer The needs of the users of the information
and Answers 2025\2026 Updated and
Verified.
Some accountants maintain that accounting standards are as much a product of political action
as they are of careful logic or empirical findings. This belief is an example of the concept of -
Answer Standard setting as apolitical process
Which of the following was not a criticism of the development of accounting standards by the
Accounting Principles Board? - Answer Harmonization. The accounting standards developed
were dissimilar to those developed by the International Accounting Standards Committee
Which of the following types of pronouncements were intended to establish the objectives and
concepts that the FASB will use in developing standards of financial accounting and reporting? -
Answer Statements of Financial Accounting Concepts (SFAC)
Which of the following companies was involved in an accounting failure that caused the public
accounting firm Arthur Andersen to gout of business? - Answer Enron
Which of the following bodies has the ultimate authority to issue accounting pronouncements
in the United States? - Answer Securities and Exchange Commission
Who has been given credit or developing the double-entry system of bookkeeping? - Answer
Fra Luca Pacioli
Which of the following is considered a constraint by Statement of Financial Accounting Concepts
No. 8? - Answer Cost
Under Statement of Financial Accounting Concepts No. 8, which of the following is an ingredient
of the primary quality of faithful representation? - Answer Completeness
Which early accounting theorist was among the first to express the view that all changes in the
value of assets and liabilities should be reflected in the financial statements? - Answer William
Paton
, Which of the following committees recommended abolishing the Accounting Principles Board
and replacing it with the Financial Accounting Board? - Answer Wheat
Under Statement of Financial Accounting Concepts No. 8, which of the following is not a
qualitative characteristic associated with faithful representation? - Answer Predictive value
Under Statement of Financial Accounting Concepts No. 8, which of the following is an ingredient
of the primary quality of relevance? - Answer Materiality
Theories may described as: - Answer normative and positive
The purpose of Statements of Financial Accounting Concepts is to - Answer Form a conceptual
framework for solving existing and emerging problems.
According to the FASB's conceptual framework, which of the following decreases stockholder
equity? - Answer Distributions by owners
Phoenix Music Company manufactures and sells stereo systems that include an assurance-type
warranty for the first 120 days. Phoenix also offers an optional extended coverage plan under
which it will repair or replace any defective part for 2 years beyond the expiration of the
assurance-type warranty. The total transaction price for the sale of the stereo system and the
extended warranty is $2,000. The standalone price of each is $1,600 and $400, respectively. The
estimated cost of the assurance-warranty is $200. The amount assigned to the assurance
warranty as unearned warranty revenue should be - Answer $400
Which of the following is an argument for using historical cost in accounting? - Answer Fair
values are subjective
An item is considered material if - Answer It is likely to influence the decision of an investor or
creditor
Which basis of accounting is most likely to provide the best assessment of an entity's past and
future ability to generate net cash inflows? - Answer Accrual basis of accounting
According to the FASB's conceptual framework, the objective of general purpose financial
reporting is based on: - Answer The needs of the users of the information
