TEST BANK $xc
Accounting Theory: Conceptual Issues in a Political and Economic
$xc $xc $xc $xc $xc $xc $xc $xc
Environment
$xc
by Harry I. Wolk, James L. Dodd, John J. Rozycki
$xc $xc $xc $xc $xc $xc $xc $xc $xc
Eighth Edition $xc
,TEST BANK FOR
$xc $xc
Accounting $xcTheory, $xcConceptual $xcIssues $xcin $xca $xcPolitical $xcand $xcEconomic $xcEnvironment $xc8e
Chapter $xc1—AN $xcINTRODUCTION $xcTO $xcACCOUNTING $xcTHEORY
TRUE/FALSE $xcQUESTIONS
1. Financial $xcaccounting $xcrefers $xcto $xcaccounting $xcinformation $xcthat $xcis $xcused $xcby $xcmanagement
$xcfor $xcdecision- $xcmaking $xcpurposes.
ANSWER: $xcFalse
2. Accounting $xctheory $xcincludes $xcthe $xcbasic $xcrules, $xcdefinitions, $xcand $xcprinciples $xcthat $xcunderlie $xcthe
$xcdrafting $xcof $xcaccounting $xcstandards $xcand $xchow $xcthey $xcare $xcderived.
ANSWER: $xcTrue
3. Accounting $xctheory $xcincludes $xcconceptual $xcframeworks, $xcaccounting $xclegislation, $xcvaluation
$xcmodels, $xcand $xchypotheses $xcand $xctheories.
ANSWER: $xcTrue
4. Hypotheses $xcand $xctheories $xcare $xcbased $xcon $xcan $xcinformal $xcmethod $xcof $xcinvestigation.
ANSWER: $xcFalse
5. Replacement $xccost $xcas $xca $xcmeasure $xcof $xcasset $xcvalue $xcis $xcgenerally $xcmore $xcreliable $xcthan $xchistorical $xccost.
ANSWER: $xcFalse
6. Accounting$xctheory $xcis $xcdeveloped $xcand $xcrefined $xcby $xcthe $xcprocess $xcof $xcaccounting $xcresearch.
ANSWER: $xcTrue
7. Indirect $xcmeasures $xcare $xcusually $xcpreferable $xcto $xcdirect $xcmeasures $xcbecause $xcthey $xcare $xcless $xccostly $xcto
$xcobtain.
ANSWER: $xcFalse
8. Assessment $xcmeasures $xcare $xcconcerned $xcwith $xcparticular $xcattributes $xcof $xcobjects $xcand $xcare
$xcalways $xcdirect $xcmeasurements.
ANSWER: $xcFalse
9. When $xca $xcdirect $xcassessment $xcmeasure $xcis $xcused, $xcthere $xcis $xcalways $xconly $xcone $xccorrect $xcmeasure.
ANSWER: $xcFalse
10. The $xcsimplest $xctype $xcof $xcmeasuring $xcsystem $xcis $xcthe $xcnominal $xcscale.
ANSWER: $xcTrue
11. A $xcchart $xcof $xcaccounts $xcis $xcan $xcexample $xcof $xcan $xcordinal $xcclassification.
ANSWER:
$xcFalse
,Chapter $xc1—AN $xcINTRODUCTION $xcTO $xcACCOUNTING
$xcTHEORY
12. Numerals $xcassigned $xcin $xcordinal $xcrankings $xcindicate $xcan $xcorder $xcof $xcpreference $xcwhere
$xcthe $xcdegree $xcof $xcpreference $xcamong $xcranks $xcis $xcthe $xcsame.
ANSWER: $xcFalse
13. In $xca $xcratio $xcscale, $xcthe $xczero $xcpoint $xcimplies $xc"nothingness," $xcor $xcthe $xcabsence $xcof $xcthe
$xcquality $xcbeing $xcmeasured.
ANSWER: $xcTrue
14. Using $xcratio $xcscale $xcmeasurement $xcis $xcpossible $xcin $xcaccounting.
ANSWER: $xcTrue
15. Objectivity $xcmay $xcbe $xcdefined $xcas $xcthe $xcdegree $xcof $xcconsensus $xcamong $xcmeasurers.
ANSWER: $xcTrue
16. Assessment $xcmeasures $xcare $xcnot $xcconcerned $xcwith $xcparticular $xcattributes $xcof $xcobjects.
ANSWER: $xcFalse
17. Prediction $xcmeasures $xcare $xcconcerned $xcwith $xcfactors $xcthat $xcmay $xcbe $xcindicative $xcof $xcfuture $xcconditions.
ANSWER: $xcTrue
18. Timeliness $xcand $xccost $xcare $xcpertinent $xcto $xcassessment $xcmeasures $xcbut $xcare $xcnot $xcpertinent
$xcto $xcprediction $xcmeasures.
ANSWER: $xcFalse
19. All $xcaccounting $xcmeasurements $xcare $xcof $xceither $xcthe $xcassessment $xcor $xcthe $xcprediction $xcvariety.
ANSWER: $xcTrue
20. The $xcneed $xcfor $xcinformation $xcon $xca $xctimely $xcbasis $xcmay $xcconflict $xcwith $xccost $xcconstraints $xcin $xcsome
$xcsituations.
ANSWER: $xcTrue
21. The $xcterms $xccalculation $xcand $xcmeasurement $xcboth $xcrefer $xcto $xcthe $xcvaluation $xcof $xca $xcreal
$xcphenomena $xcor $xcattribute.
ANSWER: $xcFalse
22. Calculations $xcattempt $xcto $xcsimulate $xcor $xccome $xcas $xcclose $xcas $xcpossible $xcto $xcthe
$xcmeasurement $xcof $xcreal $xcphenomena $xcor $xcattributes.
ANSWER: $xcFalse
Accounting $xcTheory: $xc8th Page $xc3 $xcof
$xcedition $xc11
, Chapter $xc1—AN $xcINTRODUCTION $xcTO $xcACCOUNTING
$xcTHEORY
23. FIFO and LIFO measures of cost of goods sold and inventories are examples of calculations
rather than measurements.
ANSWER: True
24. There are often trade-offs between objectivity and the usefulness of numbers generated by the
measurement process.
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
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
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
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
great majority of the firm's assets were not already owned, it would be economically justifiable to
acquire them.
ANSWER: True
MULTIPLE CHOICE QUESTIONS
1. Which of the following methods of valuing an asset is based on the amount that a firm could
acquire by selling the asset?
a. Replacement cost
b. Entry value
c. Exit value
d. Both a and b
ANSWER: C
Accounting $xcTheory: $xc8th Page $xc4 $xcof
$xcedition $xc11
Accounting Theory: Conceptual Issues in a Political and Economic
$xc $xc $xc $xc $xc $xc $xc $xc
Environment
$xc
by Harry I. Wolk, James L. Dodd, John J. Rozycki
$xc $xc $xc $xc $xc $xc $xc $xc $xc
Eighth Edition $xc
,TEST BANK FOR
$xc $xc
Accounting $xcTheory, $xcConceptual $xcIssues $xcin $xca $xcPolitical $xcand $xcEconomic $xcEnvironment $xc8e
Chapter $xc1—AN $xcINTRODUCTION $xcTO $xcACCOUNTING $xcTHEORY
TRUE/FALSE $xcQUESTIONS
1. Financial $xcaccounting $xcrefers $xcto $xcaccounting $xcinformation $xcthat $xcis $xcused $xcby $xcmanagement
$xcfor $xcdecision- $xcmaking $xcpurposes.
ANSWER: $xcFalse
2. Accounting $xctheory $xcincludes $xcthe $xcbasic $xcrules, $xcdefinitions, $xcand $xcprinciples $xcthat $xcunderlie $xcthe
$xcdrafting $xcof $xcaccounting $xcstandards $xcand $xchow $xcthey $xcare $xcderived.
ANSWER: $xcTrue
3. Accounting $xctheory $xcincludes $xcconceptual $xcframeworks, $xcaccounting $xclegislation, $xcvaluation
$xcmodels, $xcand $xchypotheses $xcand $xctheories.
ANSWER: $xcTrue
4. Hypotheses $xcand $xctheories $xcare $xcbased $xcon $xcan $xcinformal $xcmethod $xcof $xcinvestigation.
ANSWER: $xcFalse
5. Replacement $xccost $xcas $xca $xcmeasure $xcof $xcasset $xcvalue $xcis $xcgenerally $xcmore $xcreliable $xcthan $xchistorical $xccost.
ANSWER: $xcFalse
6. Accounting$xctheory $xcis $xcdeveloped $xcand $xcrefined $xcby $xcthe $xcprocess $xcof $xcaccounting $xcresearch.
ANSWER: $xcTrue
7. Indirect $xcmeasures $xcare $xcusually $xcpreferable $xcto $xcdirect $xcmeasures $xcbecause $xcthey $xcare $xcless $xccostly $xcto
$xcobtain.
ANSWER: $xcFalse
8. Assessment $xcmeasures $xcare $xcconcerned $xcwith $xcparticular $xcattributes $xcof $xcobjects $xcand $xcare
$xcalways $xcdirect $xcmeasurements.
ANSWER: $xcFalse
9. When $xca $xcdirect $xcassessment $xcmeasure $xcis $xcused, $xcthere $xcis $xcalways $xconly $xcone $xccorrect $xcmeasure.
ANSWER: $xcFalse
10. The $xcsimplest $xctype $xcof $xcmeasuring $xcsystem $xcis $xcthe $xcnominal $xcscale.
ANSWER: $xcTrue
11. A $xcchart $xcof $xcaccounts $xcis $xcan $xcexample $xcof $xcan $xcordinal $xcclassification.
ANSWER:
$xcFalse
,Chapter $xc1—AN $xcINTRODUCTION $xcTO $xcACCOUNTING
$xcTHEORY
12. Numerals $xcassigned $xcin $xcordinal $xcrankings $xcindicate $xcan $xcorder $xcof $xcpreference $xcwhere
$xcthe $xcdegree $xcof $xcpreference $xcamong $xcranks $xcis $xcthe $xcsame.
ANSWER: $xcFalse
13. In $xca $xcratio $xcscale, $xcthe $xczero $xcpoint $xcimplies $xc"nothingness," $xcor $xcthe $xcabsence $xcof $xcthe
$xcquality $xcbeing $xcmeasured.
ANSWER: $xcTrue
14. Using $xcratio $xcscale $xcmeasurement $xcis $xcpossible $xcin $xcaccounting.
ANSWER: $xcTrue
15. Objectivity $xcmay $xcbe $xcdefined $xcas $xcthe $xcdegree $xcof $xcconsensus $xcamong $xcmeasurers.
ANSWER: $xcTrue
16. Assessment $xcmeasures $xcare $xcnot $xcconcerned $xcwith $xcparticular $xcattributes $xcof $xcobjects.
ANSWER: $xcFalse
17. Prediction $xcmeasures $xcare $xcconcerned $xcwith $xcfactors $xcthat $xcmay $xcbe $xcindicative $xcof $xcfuture $xcconditions.
ANSWER: $xcTrue
18. Timeliness $xcand $xccost $xcare $xcpertinent $xcto $xcassessment $xcmeasures $xcbut $xcare $xcnot $xcpertinent
$xcto $xcprediction $xcmeasures.
ANSWER: $xcFalse
19. All $xcaccounting $xcmeasurements $xcare $xcof $xceither $xcthe $xcassessment $xcor $xcthe $xcprediction $xcvariety.
ANSWER: $xcTrue
20. The $xcneed $xcfor $xcinformation $xcon $xca $xctimely $xcbasis $xcmay $xcconflict $xcwith $xccost $xcconstraints $xcin $xcsome
$xcsituations.
ANSWER: $xcTrue
21. The $xcterms $xccalculation $xcand $xcmeasurement $xcboth $xcrefer $xcto $xcthe $xcvaluation $xcof $xca $xcreal
$xcphenomena $xcor $xcattribute.
ANSWER: $xcFalse
22. Calculations $xcattempt $xcto $xcsimulate $xcor $xccome $xcas $xcclose $xcas $xcpossible $xcto $xcthe
$xcmeasurement $xcof $xcreal $xcphenomena $xcor $xcattributes.
ANSWER: $xcFalse
Accounting $xcTheory: $xc8th Page $xc3 $xcof
$xcedition $xc11
, Chapter $xc1—AN $xcINTRODUCTION $xcTO $xcACCOUNTING
$xcTHEORY
23. FIFO and LIFO measures of cost of goods sold and inventories are examples of calculations
rather than measurements.
ANSWER: True
24. There are often trade-offs between objectivity and the usefulness of numbers generated by the
measurement process.
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
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
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
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
great majority of the firm's assets were not already owned, it would be economically justifiable to
acquire them.
ANSWER: True
MULTIPLE CHOICE QUESTIONS
1. Which of the following methods of valuing an asset is based on the amount that a firm could
acquire by selling the asset?
a. Replacement cost
b. Entry value
c. Exit value
d. Both a and b
ANSWER: C
Accounting $xcTheory: $xc8th Page $xc4 $xcof
$xcedition $xc11
