ATPB413 T2 & 3

Deductive theories can be developed through deduction, that is, through reasoning from general statements to specific statements.

• True

• False

Ethical approach emphasizes the social effects and general economic welfare on applying accounting techniques

• True

• False

Below are the reasons for differences in shareholders’ and managers incentives EXCEPT:

• Risk aversion

• Monitoring risk

• Dividend retention

• Horizon problem

Below are the hypotheses of Positive Accounting Theory (PAT) EXCEPT

• Bonus Plan Hypothesis

• Debt-Equity Hypothesis

• Signaling Hypothesis

• Political Cost Hypothesis

Theories of Regulations Include:

i. Public interest theory

ii. Efficient market theory

iii. Private interest theory

iv. Regulatory capture theory

• i, ii, iii

• ii,iii, iv

• i, iii, iv

• i, ii, iv

Regulatory capture theory aims to benefit the public at first, but the aim will eventually fail because as time flews regulator are controlled by regulated party (firms or industries)

• True

• False