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Exam (elaborations)

Test Bank For Financial Accounting Theory 7Th Edition Questions With Revised Correct Answers Verified A+

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Test Bank For Financial Accounting Theory 7Th Edition Questions With Revised Correct Answers Verified A+ 1. The Broad Outline of the Book I use Figure 1.1 as a template to describe the broad outline of the book. Since the students typically have notdhad a chance to read Chapter 1 in the firstdcoursesessi on, I stick fairly closely to the chapter material. The major points I discuss are: • Accounting in an ideal setting. Here, present-value- based accounting is natural. I go over the ideal conditions needed fo r sucha basis of accounting to be feasible, butddo not go into much d etail because this topic is covered in greater depth in Chapter 2. • An introduction to the concept of information asymmetry and resultin g problems of adverse selection and moral hazard. These problems are basic to the bookdand I feel it is desirable for the students to have a “first go” at them at this point. I concentrate on the intuition underly ing the two problems. For example, adverse selection can be illustrat ed by asking who would be first in line to purchase life insurance if th ere was no medical examination, or what quality of used cars are lik ely to be brought to market. For moral hazard I try to pin them down on how hard they would work inthis course if there were no exams.

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Institution
Financial Accounting
Course
Financial Accounting











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Institution
Financial Accounting
Course
Financial Accounting

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Uploaded on
March 21, 2025
Number of pages
880
Written in
2024/2025
Type
Exam (elaborations)
Contains
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Test bank for financial accounting
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theory 7th edition by William r. scott,
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patricia o’brien chapters 1-13, compete
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, Contents


Chapterhy1 Introduction .................................................................................................. 1

Chapterhy2 AccountingdUnderhyIdealhyConditions .......................................................... 7

Chapterhy3 ThehyDecisionhyUsefulnesshyApproachhytohyFinancialhyReporting .................... 68

Chapterhy4 EfficienthySecuritieshyMarkets ...................................................................... 129

Chapterhy5 ThehyValuehyRelevancehyofhyAccountinghyInformation .................................... 153

Chapterhy6 ThehyMeasurementhyApproachhytodDecisionhyUsefulness ............................... 194

Chapterhy7 MeasurementhyApplications ........................................................................ 237

Chapterhy8 ThehyEfficienthyContractinghyApproachhytohyDecisionhyUsefulness................... 285

Chapterhy9 AnhyAnalysishyofhyConflict .......................................................................... 321

Chapterhy10h y ExecutivehyCompensation ....................................................................... 371

Chapterhy11h y EarningshyManagement ........................................................................... 425

Chapterhy12h y StandardhySetting:hyEconomichyIssues ....................................................... 487

Chapterhy13h y StandardhySetting:hyPoliticalhyIssues .......................................................... 527




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y 1


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1.2 SomehyHistoricalhyPerspective

1.3 Thehy2007-2008hyMarkethyMeltdowns

1.4 EfficienthyContracting

1.5 AhyNotehyonhyEthicalhyBehaviour

1.6 Rules-Basedhyv.hyPrinciples-BasedhyAccountinghyStandards

1.7 ThehyComplexityhyofhyInformationhyinhyFinancialhyAccountinghyandhyReporting

1.8 ThehyRolehyofhyAccountinghyResearch

1.9 ThehyImportancehyofhyInformationhyAsymmetry

1.10 ThehyFundamentalhyProblemhyofhyFinancialhyAccountinghyTheory

1.11 RegulationhyashyahyReactionhytohythehyFundamentalhyProblem

1.12 ThehyOrganizationhyofhyThishyBook

1.12.1 IdealhyConditions

1.12.2 AdversehySelection

1.12.3 MoralhyHazard

1.12.4 StandardhySetting

1.12.5 ThehyProcesshyofhyStandardhySetting

1.13 RelevancehyofhyFinancialhyAccountinghyTheoryhytohyAccountinghyPractice

, Scott,hyFinancialhyAccountinghyTheor Instructor’shySolutionshyManualhyChapterhy
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LEARNING OBJECTIVESHYANDHYSUGGESTEDHYTEACHINGHYAPPROACHES
HY




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IhyusehyFigurehy1.1hyashyahytemplatehytohydescribehythehybroadhyoutlinehyofhythehybook.hySince
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hy



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ThehymajorhypointshyIhydiscusshyare:

• Accountinghyinhyanhyidealhysetting.hyHere,hypresent-value-
basedhyaccountinghyishynatural.hyIhygohyoverhythehyidealhyconditionshyneededh
fohyrhysuchahybasishyofhyaccountinghytohybehyfeasible,hybutddohynothygohyintohy
y



muchhydhyetailhybecausehythishytopichyishycoveredhyinhygreaterhydepthhyinhyC
hapterhy2.

• Anhyintroductionhytohythehyconcepthyofhyinformationhyasymmetryhyandhyresul
tinhyghyproblemshyofhyadversehyselectionhyandhymoralhyhazard.hyThesehypro
blemshyarehybasichytohythehybookdandhyIhyfeelhyithyishydesirablehyforhythehystuden
tshytohyhavehyahy“firsthygo”hyathythemhyathythishypoint.hyIhyconcentratehyonhythehyi
ntuitionhyunderlyhyinghythehytwohyproblems.hyForhyexample,hyadversehyselect
ionhycanhybehyillustrathyedhybyhyaskinghywhohywouldhybehyfirsthyinhylinehytohypurc
hasehylifehyinsurancehyifhythhyerehywashynohymedicalhyexamination,hyorhywhat
hy qualityhyofhyusedhycarshyarehylikhyelyhytohybehybroughthytohymarket.hyForhymo
ralhyhazardhyIhytryhytohypinhythemhydownhyonhyhowhyhardhytheyhywouldhyworkhyi
nthishycoursehyifhytherehywerehynohyexams.

• Thehyenvironmenthyinhywhichhyfinancialhyaccountinghyandhyreportinghyope
rathyes.hyMyhymainhygoalhyathythishypointhyishythatdthehystudentshydohynothytaket
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nshytitutions,hypowergeneration.hyHowever,hywehyarehyenteringhywhatdishyli
kelyhythyohybehyahyperiodhyofhyincreasinghyregulation,hyathyleasthyforhyfinancialhyi
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