Contemporary Issues in Accounting MCQ PDF

lOMoARcPSD|5156943
Contemporary Issues in accounting MCQ
Contemporary Issues in Accounting (University of South Australia)
StuDocu is not sponsored or endorsed by any college or university

Downloaded by Hidden Truth (thehiddentruth001@gmail.com)
lOMoARcPSD|5156943
Multiple choice quiz answers
Week 1
1. Normative accounting theories and research seek to:

- Describe what is normal, or generally accepted, practice
- Prescribe particular approaches not driven by existing practices
- All of the given options are correct.
- Explain and predict particular phenomena based on observation
2. Which of the following statements is true?

- All of the given options are correct
- The profit figure is an objective measure of performance
- Measures of profit ignore many social and environmental externalities caused by the firm
- The company has reported a record profit, therefore it is automatically worthy of support
3. Which of the following is a reason why accounting, and accountants, can be considered very
powerful?
- The output of the accounting process impacts on many decisions which can result in transfers of
funds, and therefore wealth
- The provision of purported objective information provides users with a source of power to drive
changes to corporations behaviour
- The emphasis on profitability measures provides support to profitable companies which may not be
worthy of support under other measures
4. One criticism of Positive Accounting Theory is that it tells us nothing about:

- Whether the practice or method being used is the most efficient
- Which method a firm should use
- Whether the practice or method being used is the most equitable
5. All liability accounts have credit balances. The accounts receivable account is a liability
account. Therefore, the accounts receivable account has a credit balance. Which of the
following statements is correct with respect to the above argument?
- The argument follows a logical and clear reasoning.

- The classification of accounts receivable is consistent with the observed classification of receivables
- The conclusion reached is clearly true
- The argument is illogical

lOMoARcPSD|5156943
6. Which of the following arguments supports the view that regulation is not necessary,
particularly to the extent that it currently exists?
- Markets for information are not efficient and therefore produce a sub-optimum amount of
information, given the problem of 'free riders'
- Investors need protection from fraudulent organisations that may produce misleading information
- Accounting information is like any other good, and people will be prepared to pay for it to the extent
that it has a use.
- Information asymmetry exists because not everyone has the same power over resources to obtain
the information they need
7. Which of the following statements is true about accounting measurements such as

profits and assets?
- They are subject to professional judgment

- They are based on hard, objective, evidence
- They would not vary if prepared by different accountants, providing they were based on the same set
of accounting standards
8. Statement 1: All the fixed assets in the company are more than 10 years old.
Statement 2: Some of the fixed assets in the company are plant and machinery.
Assuming that Statement 1 and 2 are true, which of the following is correct based on logical
deduction?
- Most plant and machinery in the company is more than 10 years old
- All plant and machinery in the company is more than 10 years old
- Very little of the plant and machinery in the company is more than 10 years old
- No plant and machinery in the company is more than 10 years old
9. The qualitative characteristics of financial reports that make information useful

to users are:
- Comparability
- Understandability, reliability and comparability
- Understandability
- Reliability
10. Theories and models in the social sciences differ from theories in the pure sciences
because:
- A number of theories may be available to describe, or provide a different perspective on, a particular
phenomenon.
- Not all theories in social science have predictions that can be tested.
- Theories about human behaviour cannot be expected to apply all the time, like some natural science
theories.
Week 2

lOMoARcPSD|5156943
1. Which of the following is not necessarily a benefit of harmonisation and convergence?
- Increased relevance, functionality and appropriateness for all countries

- Improved understanding and interpretation of financial reports by users in different countries
- Increased comparability and consistency
- Lower preparation costs for companies that have to produce different financial reports in different
countries
2. Which of the following is not assumed by the 'market for managers argument' for
reducing or eliminating regulation
- The managerial labour market operates efficiently

- Information about past management performance will be known by other prospective employers
- Information about past management performance will not be fully impounded in future salaries
- Managers are not approaching retirement
3. Under IFRS 2 and AASB 2 the fair value of share options has to be classified as:
- An expense
- A liability
- An owner's equity
- An asset
4. The process of adopting international accounting standards in Australia did not

Include:
- An initial period of harmonisation where AASB standards were made to be compatible with the
IAS's, but with some divergence allowed where appropriate
- A Corporate Law and Economic Reform Program (CLERP) Report, in 1997, outlining the rationale
and benefits for Australia of adopting international accounting standards
- A decision by the FRC in 2002 that Australia would adopt accounting standards issued by the
IASNB, and no divergence was to be acceptable
- Opposition from the Australian Stock Exchange
5. Which of the following statements is true about accounting regulation?
- It is a set of prescribed rules that provides authoritative direction

- It is developed by an independent authoritative body that has been given the power to govern how
financial statements are to be prepared
- It incorporates a basis for monitoring and enforcing compliance with the specific regulatory
requirements
6. Regulators often cite investor protection as a basis for more stringent regulation and
financial reporting requirements enacted after a financial crisis. What is not a reason for this?

lOMoARcPSD|5156943
- To protect investors in the interests of the public

- To respond to lobbying by those affected by losing money
- To look as if the regulators are doing something that seems to be a problem, and therefore maintain
their position as regulators
7. Which of the following may be the result of direct or indirect economic and social
consequences of a proposed accounting standard?
- Increased lobbying to maximise the expected positive economic benefits from the standard
- Increased lobbying to minimise the expected negative economic and social consequences from the
standard
- Impact on managerial decisions to optimise the reported numbers
8. The type of business ownership and financing system, and the taxation system, influence the
nature of accounting practice in different countries. Which of the following describes the
institutional influence more conducive to the increasing scale of globalised business and
development of international accounting standards?
- Outsider systems, where finance is mainly provided by external shareholders, and where the tax
system is separate from the accounting system
- Insider systems, where finance is mainly provided by family owners, banks and government, and the
tax system dominates the accounting system
- Outsider systems, where finance is mainly provided by family owners, banks and government, and
the tax system is separate from the accounting system
- Insider systems, where finance is mainly provided by external shareholders, and where the tax
system dominates the accounting system
9. The free-market perspective of accounting regulation suggests that accounting information:
- Should be provided free of charge

- Should be free of considerations and lobbying of the market
- Should be provided like any other good that is subject to demand and supply
- Will require regulation to avoid underproduction of information
10. Which of the following is an influence on the nature of accounting practice in different
countries
- Accidents in history, such as stock-market crashes

- The strength of the accounting profession
- Religion
Week 3

lOMoARcPSD|5156943
1. Which of the following best describes the basis of the accounting measurement model
in use today?
- Historical cost accounting

- Current cost accounting
- Historical cost, except where conceptual frameworks and accounting standards allow deviation from
it
- A mixed method accounting model
2. In the historical cost model there is an assumption that the monetary unit is fixed and
constant over time. Which of the following components of the modern economy makes the
assumption less valid than it was at the time the model was developed?
- Specific price-level changes, occasioned by such things as technological advances and shifts in
consumer preferences
- General price-level changes (inflation)
- Physical operating capital maintenance perspective
3. Assuming a price index calculated 104.5 in 2013, compared with 100 in 2012, for a bundle of
goods, what is the current purchasing power of every dollar, compared to 2012?
- 95.5 cents in every dollar, on average

- $1.045 in every dollar, on average
4. Which of the following is not a possible limitation with CPPA accounting?
- The prices of the goods and services included in the general price index may not be reflective of the
price movements (inflation) specific to that particular industry.
- The information is simple, and easily understood by users.
- Research has shown that the information provided by CPPA may not be decision-relevant.
- Users might think that the price-level adjusted amounts might reflect the specific value of specific
assets.
5. A limitation of Current Cost Accounting does not include the fact that:
- Replacement costs are easily determined, and therefore the preparation cost is low
- Replacement costs do not reflect what it would be worth if the firm decided to sell it
- CCA assumes assets would in fact be replaced, or replaced with that type of asset and not another
- There are too many versions of current cost accounting, making it confusing to preparers
6. Which of the following is not a reason why alternative methods have not gained acceptance
or been formally implemented?

lOMoARcPSD|5156943
- The arguments for the alternative methods were not logical.

- There appeared to be more interest when inflation was a problem than when it was not.
- Some alternative models were likely to incur significant costs, negative economic consequences and
impacts.
- Lack of support by the public or the government, and eventually by the accounting profession.
7. The reasons the promotion of alternative accounting models to historical cost did not
succeed include:
- There was a lack of agreement as to which model was the best

- The fact that such a change would have been extremely radical and costly
- The fact that such a change would create huge economical consequences, and therefore those
affected would lobby to protect their self-interest
8. How would the deprival value of an asset be determined?
- It is the present value of the future cash flows to be generated by the asset, except where the
current replacement cost or net selling price is less than that value
- It is the net selling price, except where the value to the business (present value) is less, or the
current replacement cost greater
- It is the current replacement cost, where the present value is less than the current replacement cost
and greater than the net selling price
- It is the value to the business of the asset (present value), within the bounds that this value is not
less than the net selling price or greater than its current replacement cost
9. What is included in 'income' according to the IASB Conceptual Framework?
- All events that result in an increase in the net assets of the reporting entity, other than owner
contributions
- All events that result in an increase in the net assets of the reporting entity
- Events that relate to the central operations of the entity
10. Which of the following statements is correct under our current accounting standards?
- Many assets can, or must, be measured at historical cost

- Inventory must be measured at cost, or net realisable value if it is lower
- Property, plant and equipment can be valued at cost where an entity has adopted the 'cost model'
for a class of property, plant and equipment

lOMoARcPSD|5156943
Week 4
1. What is the definition of a 'conceptual framework'?

- A conceptual framework is a set of prescriptions of what accounting should be.
- A conceptual framework is a structured positive theory of accounting
- A conceptual framework is a coherent system of objectives and fundamentals that are expected
to lead to consistent standards.
- A conceptual framework is a group of independent concepts on specific accounting issues, that
are grouped together to provide a single reference.
2. What is the purpose of developing a conceptual framework?

- To provide a coherent structure to accounting practice which had developed in an ad hoc way.
- To guide standard-setters to develop standards based on the same concepts and principles,
rather than in a piecemeal approach.
- To guide users where there is no accounting standard covering an issue.
3. On what criteria is a 'reporting entity', as defined in SAC 1, dependent?

- Whether there are users that are dependent on the reports to make or evaluate resource
decisions
- Professional judgment providing some guidelines to help make a decision
- Whether there are users that are dependent on the reports to make or evaluate resource
decisions, and professional judgment provides some guidelines to help make a decision
- The Corporations Law based on measures of gross revenue, dollar value of assets and the
number of employees
4. Which of the following is a qualitative characteristic of financial information in general

purpose financial reports, if they are to be useful?
- Understandability
- Comparability
- Reliability
5. Which characteristic of information, when omitted or misstated, could influence economic

decisions taken by users on the basis of financial statements?
- Relevance
- Reliability
- Materiality
- Comparability
6. Which of the following is a characteristic of reliability?

- It influences economic decisions.
- It represents faithfully what it purports to represent.
- It provides predictive value and feedback to confirm or correct earlier expectations.
- None of the given options are correct.

lOMoARcPSD|5156943
7. Which of the following is true in relation to expenses, according to the IASB Conceptual
Framework?
- Expenses are restricted to transactions and events relating to 'ongoing major or central
operations'.
- There is no reference to matching of revenue and expenses in the Conceptual Framework.
- Expenses would not include losses that were not under the control of the entity, such as
uninsured losses of assets from flood
8. Which of the following is not a perceived advantage in developing a conceptual framework

project?
- Standard-setters will be less accountable for their decisions.
- Setting accounting standards will be more economical, despite the resources needed to develop
the conceptual framework and standards.
- It will result in a reduced number of accounting standards where issues are covered by the
conceptual framework
- It will provide a defence and enhance the legitimacy of the accounting profession.
9. Which of the following is a characteristic of relevance?

- It influences economic decisions.
- It represents faithfully what it purports to represent.
- It provides predictive value and feedback to confirm or correct earlier expectations
- None of the given options is correct
10. Over time, a number of objectives have been attributed to information provided within
financial statements. Which of the following is not an objective of financial statements?
- To enable outsiders to assess the stewardship of management.

- To provide information to users that is useful for making and evaluating decisions about the
allocation of scarce resources.
- To enable reporting entities to demonstrate accountability between the entity and those parties
to which the entity is deemed to be accountable
- To help managers to maximise their own wealth and the wealth of the organisation

lOMoARcPSD|5156943
Week 5
1. The 'bonus plan hypothesis' of Positive Accounting Theory suggests managers of firms with
bonus plans tied to reported income are more likely to use accounting methods that:
- Increase prior period reported income
- Increase current period reported income
- Increase future period reported income
2. The 'debt/equity hypothesis' of Positive Accounting Theory predicts which of the

following?
- The higher the firm's debt/equity ratio, the more likely managers are to use accounting methods
that lower income.
- The lower the firm's debt/equity ratio, the more likely managers are to use accounting methods
that increase income.
- The higher the firm's debt/equity ratio, the more likely managers are to use accounting methods
that increase income.
3. The 'political cost hypothesis' of Positive Accounting Theory suggests which of the
following?
- Large firms are more likely to use accounting choices that reduce reported profits.
- Small firms are more likely to use accounting choices that reduce reported profits.
- Neither large nor small firms are more likely to use accounting choices that reduce reported
profits.
- Both large and small firms are more likely to use accounting choices that reduce reported
profits.
4. Which of the following is the main advantage of using accounting earnings instead of
share prices to determine bonuses?
- Share prices are influenced by market forces that are outside the control of management.
- Accounting information is independently audited.
- Accounting information is unbiased.
- Share prices may be manipulated by managers engaging in insider trading
5. According to Positive Accounting Theory, the existence of debt covenants:
- Can be explained from an efficiency perspective, and gives management an incentive to

manipulate accounting information from an opportunistic perspective
- Can be explained from an opportunistic perspective, and gives management an incentive to
manipulate accounting information from an efficiency perspective
- Can be explained from both efficiency and opportunistic perspectives
- Cannot be explained
6. Which of the following is not true about Positive Accounting Theory?

lOMoARcPSD|5156943
- A positive theory seeks to explain and predict particular phenomena.

- A positive theory focuses on the relationships between various individuals and how accounting
is used to assist in the functioning of these relationships.
- A positive theory prescribes how a particular practice should be undertaken
7. It is common practice for managers to be rewarded in a way that is tied to the profits of the
firm, the sales of the firm, or the return on assets. That is, their remuneration is based on the
output of the accounting system.
- Bonus schemes tied to the performance of the firm will be put in place to align the interests of
the owners and the managers.
- Rewarding managers on the basis of accounting profits may induce them to manipulate
accounting numbers.
- There would be limited incentives for the manager to adopt risky strategies that increase the
value of the firm.
- The manager may be reluctant to take on optimal levels of debt.
8. Which of the following bonus schemes would be appropriate for the managers of a
biotechnology research company?
- A market-based bonus scheme, as it is more appropriate to reward the manager in terms of the
market value of the firm's securities, which are assumed to be influenced by expectations about
the net present value of expected future cash flows, and the manager will be given an incentive
to increase the value of the firm.
- A fixed basis scheme, so that the managers would not take great risks, reject risky projects, and
be reluctant to take on optimal levels of debt as it may be beneficial to those with equity in the
firm.
- An accounting-based bonus scheme as this will be in the interest of the manager, as that
manager will potentially receive greater rewards and will not have to bear the costs of the
perceived opportunistic behaviours.
- A combination of fixed basis and accounting-based scheme, as assuming that self-interest
drives the actions of the managers, it may be necessary to put in place remuneration schemes
that reward the managers in a way that is, at least in part, tied to the performance of the firm.
9. Which of the following is an example of political costs under the PAT perspective?
- Wage and salary deductions paid to unions
- Contributions to political parties
- Costs associated with increased wage claims
- The cost of remaining largely unnoticed by government regulatory agencies
10. A contribution of Positive Theory is that it enables us to understand:

- Why interest groups expend resources lobbying for or against particular standards
- Why a manager adopts particular accounting techniques over others
- The effect accounting standards have on different groups and resource allocation

lOMoARcPSD|5156943
Week 6
1. Which of the following statements is false?

-Legitimacy is considered to be a resource on which an organisation is dependent for survival.
-Legitimacy Theory suggests that organisations will act in a way that society perceives as legitimate.
-Legitimacy Theory relies upon the notion of the 'social contract'
-Legitimacy Theory asserts that organisations will attempt to ensure that society perceives their actions
as 'legitimate'
2. Which of the following is true about Stakeholder Theory?

-Stakeholder Theory can help managers in solving ethical problems, such as the environment, and gives
managers a practical framework for assessing and balancing interests as long as normative
principles are the foundation upon which decisions are made
-Normative principles are incorporated into organisational decision making, and it allows managers to
give an unbalanced or biased weighting of issues in order to preserve ethical integrity
-Assessing stakeholders is often based on descriptive, not normative, assumptions.
-All of the given options are correct.
3. Which of the following is not a means by which an organisation may attempt to legitimise
its activities?
-Adapting its output, goal and methods of operation to conform to prevailing definitions of legitimacy.
-Attempting, through communication, to alter the definition of social legitimacy so that it conforms to the
organisation's present practices, outputs and values
-Asserting its right to operate under the existing regulatory framework that has been determined by
society
-Attempting, through communication, to become identified with symbols, values or institutions that have
a strong base of legitimacy.
4. The idea of the 'social contract' is that corporations only exist because they benefit:
-Shareholders
-Governments
-Managers
-Society
5. An example of a legitimising symbol would be:

-The World Wide Fund for Nature assessing compliance with the Australian Minerals Industry Code
-Monsanto employing the former CEO of Greenpeace Australia as a consultant
-Changing the name of a company from 'British Petroleum' to 'Beyond Petroleum'
-All of the given options are correct.

lOMoARcPSD|5156943
6. Empirical findings consistent with Legitimacy Theory would be increased disclosure of:
-Environmental good news, immediately following prosecutions for breaches of environmental standards
-Environmental bad news, immediately following prosecutions for breaches of environmental standards
-Environmental good news, immediately preceding prosecutions for breaches of environmental
standards
-Environmental bad news, immediately preceding prosecutions for breaches of environmental standards
7. Managerial Stakeholder Theory suggests that annual reports will be used to:
-Gain the support of powerful stakeholders
-Report on the activities of management with respect to each stakeholder
-Explain why profits may have been sacrificed in order to respect the minimum rights of some
stakeholders
-All of the given options are correct
8. According to Lindblom (1994), which of the following strategies can an organisation adopt
when it perceives that its legitimacy is in question because its actions or operations are at
variance with society's expectations and values?
-Seek to educate and inform its 'relevant public' about actual changes in the organisation's performance
and activities
-Seek to change the perceptions that 'relevant public' have of the organisation's performance and
activities.
-Seek to manipulate perception by deflecting attention from the issue of concern onto other issues to
demonstrate how the organisation has fulfilled social expectations
-All of the given options are correct
9. Institutional Theory suggests which of the following?

-While organisational structures are initially varied, they are gradually homogenized by competition, the
state and professions.
-While organisational structures are initially homogenous, they are gradually varied by competition, the
State and professions
-The organisational structure is determined by institutional factors such as management style and
organisational culture
-The organisational structure is determined by the organisation's most powerful stakeholders

lOMoARcPSD|5156943
10. Which of the following is true about substantive management techniques of legitimation?
-It does not actually reflect any real change in activities.
-Corporate behaviour is portrayed in a manner to 'appear consistent with social values and expectations'
-It involves real, material change in organisational goals, structures, and processes or socially
institutionalized practices
-Companies may publish policies on various issues including the environment but not enforce or set in
place mechanisms for the full adoption of such policies

lOMoARcPSD|5156943
Week 7
1. Which of the following items would not be covered by AASB 141?
-dairy cattle
-wine
-fruit trees
-vines
2. Net present value (NPV) method has been considered as an alternative valuation technique to
historical cost for biological assets. The NPV method may be described as:
-An accounting concept based on the statement of cash flows to determine the present value of
investments.
-A finance technique for testing the efficiency of the market by comparing share prices to the discounted
cash inflows associated with the asset.
-An economic concept based on the notion that an asset's value can be determined from its future cash
flows.
-An accounting method for projecting the revenues and expenses associated with an asset or entity.
3. Which of the following statements is correct with respect to accounting for biological assets
as required in AASB 141?
-A biological asset may initially be recognised at recoverable amount.
-A biological asset that was initially recognised at fair value less point-of-sale costs may subsequently
be recognised at cost when fair value less point-of-sale costs is no longer available.
-If a biological asset is initially recognised at cost it should be measured at cost less any accumulated
depreciation.
-A biological asset may initially be recognised at cost when market-determined prices or value are not
available and for which alternative estimates of fair value are not available.
4. Examples of biological assets include:

-preserved fossilised remains
-aquaculture and fishery holdings
-telecommunications and computer software
-trees in a recreational park.
5. According to AASB 141, which of the following would not apply:

-an investment in a forest as a carbon sink which gives rise to carbon credits that can either be sold or
used to offset pollution caused by the entity
-non human living assets other than animals and plants such as viruses and blood cells
-all of the given answers
-products that are the result of processing after harvest
6. In accordance with AASB 141 a gain or loss may arise from:

-initial recognition of an agricultural produce.
-all of the given answers

lOMoARcPSD|5156943
-subsequent measurement dates of a biological asset.

-initial recognition of a biological asset.
7. Where a biological asset is not separable from other assets:

-the value of the package of assets for which an active market exists should be used to assist in
determining the fair value of the biological assets
-the value of the biological asset should be included in the value of the other asset.
-the fair values of the non-biological assets should be subtracted from the package value.
-the value of the package of assets for which an active market exists should be used to assist in
determining the fair value of the biological assets and the fair values of the non-biological assets
should be subtracted from the package value.
8. AASB 141 states that where no active market exists fair value may be determined by:
-using net present values calculated at the current-market determined post-tax rate.
-market prices for similar assets without adjustments to reflect differences.
-the most recent market transaction price, irrespective of any changes to economic conditions.
-sector benchmarks expressed in relevant units for that type of asset.
9. What treatment of revenue recognition is required by AASB 141?

-Changes in the net market values of biological assets that relate to volume changes must be
recognised as revenues or expenses as appropriate in the profit and loss statement.
-Increments and decrements in the net market values of biological assets must be recognized as
revenues or expenses in the profit and loss statement for the financial year in which the increments
or decrements occur.
-Changes in the current replacement cost of biological assets should be treated as adjustments to the
asset revaluation reserve. Revenues should be recognised on the sale of the asset and matched
against the replacement cost of the asset sold.
-Revenue should be recognised in the statement of comprehensive income on the sale of the asset.
Losses should be recognised as a result of a write-down to recoverable amount.
10. Biological assets may be difficult to classify as current or non-current because:

-The operating cycle of the entity may be unknown.
-The asset may unexpectedly become ill or die.
-The value of the asset may change depending on management's intention.
-The same physical assets may have either a shorter or longer life span depending on management
intention.

Contemporary Issues in Accounting MCQ PDF

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Contemporary Issues in Accounting MCQ PDF

Uploaded by

Copyright:

Available Formats

lOMoARcPSD|5156943

Contemporary Issues in accounting MCQ

Contemporary Issues in Accounting (University of South Australia)

StuDocu is not sponsored or endorsed by any college or university

Multiple choice quiz answers

1. Normative accounting theories and research seek to:

2. Which of the following statements is true?

4. One criticism of Positive Accounting Theory is that it tells us nothing about:

- The argument follows a logical and clear reasoning.

Downloaded by Hidden Truth (thehiddentruth001@gmail.com)

7. Which of the following statements is true about accounting measurements such as

- They are subject to professional judgment

9. The qualitative characteristics of financial reports that make information useful

Downloaded by Hidden Truth (thehiddentruth001@gmail.com)

1. Which of the following is not necessarily a benefit of harmonisation and convergence?

- Increased relevance, functionality and appropriateness for all countries

- The managerial labour market operates efficiently

4. The process of adopting international accounting standards in Australia did not

5. Which of the following statements is true about accounting regulation?

- It is a set of prescribed rules that provides authoritative direction

Downloaded by Hidden Truth (thehiddentruth001@gmail.com)

- To protect investors in the interests of the public

9. The free-market perspective of accounting regulation suggests that accounting information:

- Should be provided free of charge

- Accidents in history, such as stock-market crashes

Downloaded by Hidden Truth (thehiddentruth001@gmail.com)

- Historical cost accounting

- 95.5 cents in every dollar, on average

4. Which of the following is not a possible limitation with CPPA accounting?

Downloaded by Hidden Truth (thehiddentruth001@gmail.com)

- The arguments for the alternative methods were not logical.

- There was a lack of agreement as to which model was the best

8. How would the deprival value of an asset be determined?

9. What is included in 'income' according to the IASB Conceptual Framework?

- Many assets can, or must, be measured at historical cost

Downloaded by Hidden Truth (thehiddentruth001@gmail.com)

1. What is the definition of a 'conceptual framework'?

2. What is the purpose of developing a conceptual framework?

3. On what criteria is a 'reporting entity', as defined in SAC 1, dependent?

4. Which of the following is a qualitative characteristic of financial information in general

5. Which characteristic of information, when omitted or misstated, could influence economic

6. Which of the following is a characteristic of reliability?

Downloaded by Hidden Truth (thehiddentruth001@gmail.com)

8. Which of the following is not a perceived advantage in developing a conceptual framework

9. Which of the following is a characteristic of relevance?

- To enable outsiders to assess the stewardship of management.

Downloaded by Hidden Truth (thehiddentruth001@gmail.com)

2. The 'debt/equity hypothesis' of Positive Accounting Theory predicts which of the

5. According to Positive Accounting Theory, the existence of debt covenants:

- Can be explained from an efficiency perspective, and gives management an incentive to

Downloaded by Hidden Truth (thehiddentruth001@gmail.com)

- A positive theory seeks to explain and predict particular phenomena.

10. A contribution of Positive Theory is that it enables us to understand:

Downloaded by Hidden Truth (thehiddentruth001@gmail.com)

1. Which of the following statements is false?

2. Which of the following is true about Stakeholder Theory?

5. An example of a legitimising symbol would be:

Downloaded by Hidden Truth (thehiddentruth001@gmail.com)

9. Institutional Theory suggests which of the following?

Downloaded by Hidden Truth (thehiddentruth001@gmail.com)

Downloaded by Hidden Truth (thehiddentruth001@gmail.com)

4. Examples of biological assets include:

5. According to AASB 141, which of the following would not apply: