M
Test Bank for Accounting Theory: Conceptual Issues in a Political and Economic
Environment Eighth Edition by Harry I. Wolk
PR
ES
SI
VE
G
R
AD
ES
KJHGFDSA
, Test Bank for
Accounting Theory, Conceptual Issues in a Political and Economic Environment 8e
Chapter 1—AN INTRODUCTION TO ACCOUNTING THEORY
TRUE/FALSE QUESTIONS
M
1. Financial accounting refers to accounting information that is used by management for decision-
making purposes.
ANSWER: False
PR
2. Accounting theory includes the basic rules, definitions, and principles that underlie the drafting of
accounting standards and how they are derived.
ANSWER: True
3. Accounting theory includes conceptual frameworks, accounting legislation, valuation models,
and hypotheses and theories.
ES
ANSWER: True
4. Hypotheses and theories are based on an informal method of investigation.
ANSWER: False
SI
5. Replacement cost as a measure of asset value is generally more reliable than historical cost.
ANSWER: False
6. Accounting theory is developed and refined by the process of accounting research.
VE
ANSWER: True
7. Indirect measures are usually preferable to direct measures because they are less costly to obtain.
ANSWER: False
G
8. Assessment measures are concerned with particular attributes of objects and are always direct
measurements.
ANSWER: False
R
9. When a direct assessment measure is used, there is always only one correct measure.
ANSWER: False
AD
10. The simplest type of measuring system is the nominal scale.
ANSWER: True
11. A chart of accounts is an example of an ordinal classification.
ES
ANSWER: False
KJHGFDSA
, kjhgfdsa
Chapter 1—AN INTRODUCTION TO ACCOUNTING THEORY
12. Numerals assigned in ordinal rankings indicate an order of preference where the degree of
preference among ranks is the same.
ANSWER: False
M
13. In a ratio scale, the zero point implies "nothingness," or the absence of the quality being
measured.
PR
ANSWER: True
14. Using ratio scale measurement is possible in accounting.
ANSWER: True
15. Objectivity may be defined as the degree of consensus among measurers.
ES
ANSWER: True
16. Assessment measures are not concerned with particular attributes of objects.
ANSWER: False
17. Prediction measures are concerned with factors that may be indicative of future conditions.
SI
ANSWER: True
18. Timeliness and cost are pertinent to assessment measures but are not pertinent to prediction
measures.
VE
ANSWER: False
19. All accounting measurements are of either the assessment or the prediction variety.
ANSWER: True
G
20. The need for information on a timely basis may conflict with cost constraints in some situations.
ANSWER: True
R
21. The terms calculation and measurement both refer to the valuation of a real phenomena or
attribute.
ANSWER: False
AD
22. Calculations attempt to simulate or come as close as possible to the measurement of real
phenomena or attributes.
ANSWER: False
ES
Accounting Theory: 8th edition Page 3 of 11
, kjhgfdsa
Chapter 1—AN INTRODUCTION TO ACCOUNTING THEORY
23. FIFO and LIFO measures of cost of goods sold and inventories are examples of calculations
rather than measurements.
ANSWER: True
M
24. There are often trade-offs between objectivity and the usefulness of numbers generated by the
measurement process.
PR
ANSWER: True
25. Measurement is an integral part of accounting theory.
ANSWER: True
26. Throughout the financial history of the United States, current value has been the accepted
ES
valuation system for published financial statements.
ANSWER: False
27. The discounted cash flow approach can be used to determine an objective measurement for most
assets and liabilities.
ANSWER: False
SI
28. A general price-level adjustment refers to the purchasing power of the monetary unitary unit
relative to all goods and services in the economy.
ANSWER: True
VE
29. Both exit value and replacement cost are valuation systems that fall into the current value
category.
ANSWER: True
30. The principal argument used to justify the replacement cost system over exit values is that if the
G
great majority of the firm's assets were not already owned, it would be economically justifiable to
acquire them.
ANSWER: True
R
MULTIPLE CHOICE QUESTIONS
1. Which of the following methods of valuing an asset is based on the amount that a firm could
AD
acquire by selling the asset?
a. Replacement cost
b. Entry value
c. Exit value
d. Both a and b
ANSWER: C
ES
Accounting Theory: 8th edition Page 4 of 11
Test Bank for Accounting Theory: Conceptual Issues in a Political and Economic
Environment Eighth Edition by Harry I. Wolk
PR
ES
SI
VE
G
R
AD
ES
KJHGFDSA
, Test Bank for
Accounting Theory, Conceptual Issues in a Political and Economic Environment 8e
Chapter 1—AN INTRODUCTION TO ACCOUNTING THEORY
TRUE/FALSE QUESTIONS
M
1. Financial accounting refers to accounting information that is used by management for decision-
making purposes.
ANSWER: False
PR
2. Accounting theory includes the basic rules, definitions, and principles that underlie the drafting of
accounting standards and how they are derived.
ANSWER: True
3. Accounting theory includes conceptual frameworks, accounting legislation, valuation models,
and hypotheses and theories.
ES
ANSWER: True
4. Hypotheses and theories are based on an informal method of investigation.
ANSWER: False
SI
5. Replacement cost as a measure of asset value is generally more reliable than historical cost.
ANSWER: False
6. Accounting theory is developed and refined by the process of accounting research.
VE
ANSWER: True
7. Indirect measures are usually preferable to direct measures because they are less costly to obtain.
ANSWER: False
G
8. Assessment measures are concerned with particular attributes of objects and are always direct
measurements.
ANSWER: False
R
9. When a direct assessment measure is used, there is always only one correct measure.
ANSWER: False
AD
10. The simplest type of measuring system is the nominal scale.
ANSWER: True
11. A chart of accounts is an example of an ordinal classification.
ES
ANSWER: False
KJHGFDSA
, kjhgfdsa
Chapter 1—AN INTRODUCTION TO ACCOUNTING THEORY
12. Numerals assigned in ordinal rankings indicate an order of preference where the degree of
preference among ranks is the same.
ANSWER: False
M
13. In a ratio scale, the zero point implies "nothingness," or the absence of the quality being
measured.
PR
ANSWER: True
14. Using ratio scale measurement is possible in accounting.
ANSWER: True
15. Objectivity may be defined as the degree of consensus among measurers.
ES
ANSWER: True
16. Assessment measures are not concerned with particular attributes of objects.
ANSWER: False
17. Prediction measures are concerned with factors that may be indicative of future conditions.
SI
ANSWER: True
18. Timeliness and cost are pertinent to assessment measures but are not pertinent to prediction
measures.
VE
ANSWER: False
19. All accounting measurements are of either the assessment or the prediction variety.
ANSWER: True
G
20. The need for information on a timely basis may conflict with cost constraints in some situations.
ANSWER: True
R
21. The terms calculation and measurement both refer to the valuation of a real phenomena or
attribute.
ANSWER: False
AD
22. Calculations attempt to simulate or come as close as possible to the measurement of real
phenomena or attributes.
ANSWER: False
ES
Accounting Theory: 8th edition Page 3 of 11
, kjhgfdsa
Chapter 1—AN INTRODUCTION TO ACCOUNTING THEORY
23. FIFO and LIFO measures of cost of goods sold and inventories are examples of calculations
rather than measurements.
ANSWER: True
M
24. There are often trade-offs between objectivity and the usefulness of numbers generated by the
measurement process.
PR
ANSWER: True
25. Measurement is an integral part of accounting theory.
ANSWER: True
26. Throughout the financial history of the United States, current value has been the accepted
ES
valuation system for published financial statements.
ANSWER: False
27. The discounted cash flow approach can be used to determine an objective measurement for most
assets and liabilities.
ANSWER: False
SI
28. A general price-level adjustment refers to the purchasing power of the monetary unitary unit
relative to all goods and services in the economy.
ANSWER: True
VE
29. Both exit value and replacement cost are valuation systems that fall into the current value
category.
ANSWER: True
30. The principal argument used to justify the replacement cost system over exit values is that if the
G
great majority of the firm's assets were not already owned, it would be economically justifiable to
acquire them.
ANSWER: True
R
MULTIPLE CHOICE QUESTIONS
1. Which of the following methods of valuing an asset is based on the amount that a firm could
AD
acquire by selling the asset?
a. Replacement cost
b. Entry value
c. Exit value
d. Both a and b
ANSWER: C
ES
Accounting Theory: 8th edition Page 4 of 11
