QUIZ 2 - Positive vs Normative Accounting Theory

The technique adopted were motivated by the desire to smooth earnings happened mostly in which phase in the USA?

• Management contribution

• Institution contribution

• Professional contribution

• Politicization

The limitation of management and professional association in formulating accounting theory is the phase of ___________

• Management contribution

• Institution contribution

• Professional contribution

• Politicization

Which of the following was established in 1967 under the accountant act?

• MIA

• MICPA/MACPA

• FRF

• MASB

Capital Market and Services Act (CMSA) 2007: requires company to submit ___________________ to Securities Commission.

• A copy of business registration

• A copy of tax file

• A copy of bank statement

• A copy of annual report

Which of these is not a criticism of the descriptive pragmatic approach to theory construction?

• It does not allow for accounting techniques to be challenged

• Some of the users of accounting information may be illogical in their responses

• The focus is on the accountant’s behaviour not on measuring the attributes of the firm

• There is no assessment of whether the accountant reports in the way he or she should

Which of these is not a typical approach to testing hypotheses under positive accounting theory?

• Questionnaires

• Surveys

• Taking out data of specific accounting systems to determine whether the data helps users to make the right decisions

• Testing the assumed importance of accounting outputs in the marketplace

Which of these is not an assumption used in normative theory construction?

• There are multiple available profit measures

• Financial accounting is useful for making economic decisions

• Markets are inefficient and can be fooled by “creative accountants’

• Conventional accounting is inefficient

The theories use large-scale statistical research, remote from practitioners and their concerns is a criticism of:

• The psychological pragmatic approach

• The naturalist approach

• The descriptive pragmatic approach

• The positive accounting approach

A theory development based on scientific methodology using economic based empirical literature is under______________

• The normative approach

• The psychological pragmatic approach

• The descriptive pragmatic approach

• The positive accounting approach

In which of the following context would accountants be required to exercise professional judgement?

• Estimating net realisable value of inventories

• Deciding which model to use to measure value of property, plant and equipment after initial recognition

• Determining depreciation method used for non-current assets

• All of the options are correct