Chapter 1—AN INTRODUCTION TO ACCOUNTING THEORY
TEST BANK FOR
Accounting Theory: Conceptual Issues in a Political and Economic
Environment
BY Harry. I Walk, James L. Dadd
9th Edition
Accounting Theory: 9th edition Page 1 of 11
,Chapter 1—AN INTRODUCTION TO ACCOUNTING THEORY
TRUE/FALSE
1. Financial Accounting Refers To Accounting Information That Is Used By Management For
Decision- Making Purposes.
ANSWER: F
2. Accounting Theory Includes The Basic Rules, Definitions, And Principles That Underlie The
Drafting Of Accounting Standards And How They Are Derived.
ANSWER: T
3. Accounting Theory Includes Conceptual Frameworks, Accounting Legislation, Valuation
Models, And Hypotheses And Theories.
ANSWER: T
4. Hypotheses And Theories Are Based On An Informal Method Of Investigation.
ANSWER: F
5. Replacement Cost As A Measure Of Asset Value Is Generally More Reliable Than Historical Cost.
ANSWER: F
6. Accounting Theory Is Developed And Refined By The Process Of Accounting Research.
ANSWER: T
7. Indirect Measures Are Usually Preferable To Direct Measures Because They Are Less Costly To
Obtain.
ANSWER: F
8. Assessment Measures Are Concerned With Particular Attributes Of Objects And Are Always
Direct Measurements.
ANSWER: F
9. When A Direct Assessment Measure Is Used, There Is Always Only One Correct Measure.
ANSWER: F
10. The Simplest Type Of Measuring System Is The Nominal Scale.
ANSWER: T
11. A Chart Of Accounts Is An Example Of An Ordinal Classification.
ANSWER: F
Accounting Theory: 9th edition Page 2 of 11
,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: F
13. In A Ratio Scale, The Zero Point Implies “Nothingness,” Or The Absence Of The
Quality Being Measured.
ANSWER: T
14. Using Ratio Scale, Measurement Is Possible In Accounting.
ANSWER: T
15. Objectivity May Be Defined As The Degree Of Consensus Among Measurers.
ANSWER: T
16. Assessment Measures Are Not Concerned With Particular Attributes Of Objects.
ANSWER: F
17. Prediction Measures Are Concerned With Factors That May Be Indicative Of Future Conditions.
ANSWER: T
18. Timeliness And Cost Are Pertinent To Assessment Measures But Are Not Pertinent To
Prediction Measures.
ANSWER: F
19. All Accounting Measurements Are Of Either The Assessment Or The Prediction Variety.
ANSWER: T
20. The Need For Information On A Timely Basis May Conflict With Cost Constraints In Some Situations.
ANSWER: T
21. The Terms Calculation And Measurement Both Refer To The Valuation Of A Real
Phenomena Or Attribute.
ANSWER: F
22. Calculations Attempt To Simulate Or Come As Close As Possible To The Measurement
Of Real Phenomena Or Attributes.
ANSWER: F
Accounting Theory: 9th edition Page 3 of 11
, 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: T
24. There Are Often Trade-Offs Between Objectivity And The Usefulness Of Numbers
Generated By The Measurement Process.
ANSWER: T
25. Measurement Is An Integral Part Of Accounting Theory.
ANSWER: T
26. Throughout The Financial History Of The United States, Current Value Has Been The
Accepted Valuation System For Published Financial Statements.
ANSWER: F
27. The Discounted Cash Flow Approach Can Be Used To Determine An Objective Measurement
For Most Assets And Liabilities.
ANSWER: F
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: T
29. Both Exit Value And Replacement Cost Are Valuation Systems That Fall Into The
Current Value Category.
ANSWER: T
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: T
MULTIPLE CHOICE
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 Theory: 9th edition Page 4 of 11
TEST BANK FOR
Accounting Theory: Conceptual Issues in a Political and Economic
Environment
BY Harry. I Walk, James L. Dadd
9th Edition
Accounting Theory: 9th edition Page 1 of 11
,Chapter 1—AN INTRODUCTION TO ACCOUNTING THEORY
TRUE/FALSE
1. Financial Accounting Refers To Accounting Information That Is Used By Management For
Decision- Making Purposes.
ANSWER: F
2. Accounting Theory Includes The Basic Rules, Definitions, And Principles That Underlie The
Drafting Of Accounting Standards And How They Are Derived.
ANSWER: T
3. Accounting Theory Includes Conceptual Frameworks, Accounting Legislation, Valuation
Models, And Hypotheses And Theories.
ANSWER: T
4. Hypotheses And Theories Are Based On An Informal Method Of Investigation.
ANSWER: F
5. Replacement Cost As A Measure Of Asset Value Is Generally More Reliable Than Historical Cost.
ANSWER: F
6. Accounting Theory Is Developed And Refined By The Process Of Accounting Research.
ANSWER: T
7. Indirect Measures Are Usually Preferable To Direct Measures Because They Are Less Costly To
Obtain.
ANSWER: F
8. Assessment Measures Are Concerned With Particular Attributes Of Objects And Are Always
Direct Measurements.
ANSWER: F
9. When A Direct Assessment Measure Is Used, There Is Always Only One Correct Measure.
ANSWER: F
10. The Simplest Type Of Measuring System Is The Nominal Scale.
ANSWER: T
11. A Chart Of Accounts Is An Example Of An Ordinal Classification.
ANSWER: F
Accounting Theory: 9th edition Page 2 of 11
,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: F
13. In A Ratio Scale, The Zero Point Implies “Nothingness,” Or The Absence Of The
Quality Being Measured.
ANSWER: T
14. Using Ratio Scale, Measurement Is Possible In Accounting.
ANSWER: T
15. Objectivity May Be Defined As The Degree Of Consensus Among Measurers.
ANSWER: T
16. Assessment Measures Are Not Concerned With Particular Attributes Of Objects.
ANSWER: F
17. Prediction Measures Are Concerned With Factors That May Be Indicative Of Future Conditions.
ANSWER: T
18. Timeliness And Cost Are Pertinent To Assessment Measures But Are Not Pertinent To
Prediction Measures.
ANSWER: F
19. All Accounting Measurements Are Of Either The Assessment Or The Prediction Variety.
ANSWER: T
20. The Need For Information On A Timely Basis May Conflict With Cost Constraints In Some Situations.
ANSWER: T
21. The Terms Calculation And Measurement Both Refer To The Valuation Of A Real
Phenomena Or Attribute.
ANSWER: F
22. Calculations Attempt To Simulate Or Come As Close As Possible To The Measurement
Of Real Phenomena Or Attributes.
ANSWER: F
Accounting Theory: 9th edition Page 3 of 11
, 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: T
24. There Are Often Trade-Offs Between Objectivity And The Usefulness Of Numbers
Generated By The Measurement Process.
ANSWER: T
25. Measurement Is An Integral Part Of Accounting Theory.
ANSWER: T
26. Throughout The Financial History Of The United States, Current Value Has Been The
Accepted Valuation System For Published Financial Statements.
ANSWER: F
27. The Discounted Cash Flow Approach Can Be Used To Determine An Objective Measurement
For Most Assets And Liabilities.
ANSWER: F
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: T
29. Both Exit Value And Replacement Cost Are Valuation Systems That Fall Into The
Current Value Category.
ANSWER: T
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: T
MULTIPLE CHOICE
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 Theory: 9th edition Page 4 of 11
