Test Bank – Accounting Theory: Conceptual Issues in a Political and Economic Environment (9th Edition)

Test Bank n




AccountingTheory:ConceptualIssuesin a
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Political and Economic Environment 9th
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Edition n




by Harry I. Wolk, James L. Dodd & John
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J. Rozycki n




100% Verified Answers| A+ Grade
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1

, Chapter 1—AN INTRODUCTION TO ACCOUNTING THEORY
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n TRUE/FALSE QUESTIONS n




1. Financial accounting refers to accounting information that is used by management for decision- making purposes.
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n ANSWER: False n




2. Accounting theory includes the basic rules, definitions, and principles that underlie the drafting of accounting
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standards and how they are derived.
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ANSWER: True n




3. Accounting theory includes conceptual frameworks, accounting legislation, valuation models, and hypotheses and
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theories.
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ANSWER: True n




4. Hypotheses and theories are based on an informal method of investigation.
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n ANSWER: False n




5. Replacement cost as a measure of asset value is generally more reliable than historical cost.
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n ANSWER: False n




6. Accounting theory is developed and refined by the process of accounting research.
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n ANSWER: True n




7. Indirect measures are usually preferable to direct measures because they are less costly to obtain.
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n ANSWER: False n




8. Assessment measures are concerned with particular attributes of objects and are always direct measurements.
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n ANSWER: False n




9. When a direct assessment measure is used, there is always only one correct measure.
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n ANSWER: False n




2

,10. The simplest type of measuring system is the nominal scale.
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n ANSWER: True n




11. A chart of accounts is an example of an ordinal classification.
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n ANSWER: False n




12. Numerals assigned in ordinal rankings indicate an order of preference where the degree of preference among
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ranks is the same.
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ANSWER: False n




13. In a ratio scale, the zero point implies "nothingness," or the absence of the quality being measured.
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n ANSWER: True n




14. Using ratio scale measurement is possible in accounting.
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n ANSWER: True n




15. Objectivity may be defined as the degree of consensus among measurers.
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n ANSWER: True n




16. Assessment measures are not concerned with particular attributes of objects.
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n ANSWER: False n




17. Prediction measures are concerned with factors that may be indicative of future conditions.
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n ANSWER: True n




18. Timeliness and cost are pertinent to assessment measures but are not pertinent to prediction measures.
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n ANSWER: False n




19. All accounting measurements are of either the assessment or the prediction variety.
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n ANSWER: True n




3

, 20. The need for information on a timely basis may conflict with cost constraints in some situations.
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n ANSWER: True n




21. The terms calculation and measurement both refer to the valuation of a real phenomena or attribute.
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n ANSWER: False n




22. Calculations attempt to simulate or come as close as possible to the measurement of real phenomena or
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attributes.
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ANSWER: False n




23. FIFO and LIFO measures of cost of goods sold and inventories are examples of calculations rather than
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measurements.
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ANSWER: True n




24. There are often trade-offs between objectivity and the usefulness of numbers generated by the measurement
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process.
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ANSWER: True n




25. Measurement is an integral part of accounting theory. n n n n n n n




n ANSWER: True n




26. Throughout the financial history of the United States, current value has been the accepted valuation system for
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published financial statements.
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ANSWER: False n




27. The discounted cash flow approach can be used to determine an objective measurement for most assets and
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liabilities.
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ANSWER: False n




28. A general price-level adjustment refers to the purchasing power of the monetary unitary unit relative to all goods and
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services in the economy.
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ANSWER: True n




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