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WorksheetsINTRODUCTION TO FINANCIAL ACCOUNTING
Total questions: 40
Worksheet time: 38mins
1.1 What is theory?
1.___________ points out that the term “theory” in accounting not only applies to “grand theories” which seek to tell us about board generalizable issues, but also applies to any framework which helps us make sense of aspects of the world in which we live, and which helps provide a structure to understand our experience
Llewelyn
Czarniawska
Hendriksen
Unerman and O’Dwyer
1.1 What is theory?
2. In the book of theories impose cohesion and stability, what does it consider
i. Prescribe
ii. Explain
iii. Predict
iv. Seek
i and iv
ii and iii
iii and iv
all above
1.2 Why is it importance?
3. What is not the result of studying various accounting theory in the first place?
Inspires administrator to choose specific bookkeeping techniques in inclination to other people
How the different components of bookkeeping ought to be estimated
Regardless of whether there is a "genuine measure" of pay
Empower the individual to get a right bookkeeping treatment
1.2 Why is it importance?
4.What is the important of accounting in society
Enable the person to make significant decision
Enable the person to get better result in statement position
Enable the person to be in understand the society social household income and needs
Enable the person to evaluate the one’s economy
1.3 Overview of Theories of Accounting
Inductive Theories
5. An early development of accounting theory, relied on what process?
Process of deductive
Process of Ideas
Process of Induction
Process of Observation
1.3 Overview of Theories of Accounting
Inductive Theories
6. There are several general conditions that Calmers state which can be developed through observation. What are the conditions?
i. The number of observations forming the basis of a generalization must be large
ii. No accepted observation should conflict with the derived universal law
iii. The observation must not be repeated under a wide variety of conditions
iv. The observation must be repeated under a wide variety of conditions
i, ii, iii
i, ii, iv
i, and ii
i, and iv
1.1 Overview of Theories of Accounting
Prescriptive (normative) Theories
7. On 1960s and 1970s this period is commonly referred as________ of accounting research
Normative period
Parallel period
Positive period
Deductive period
1.3 Overview of Theories of Accounting
Predictive Theories
8. In the mid-to-date 1970 there was a further change in the focus of accounting research and theory development. The major aim of accounting research is explaining and predicting accounting practice, rather than prescribing particular approach. Many accounting researchers during that time move to predictive research. What is the previous research before predictive research?
Negative research
Prescriptive research
Descriptive research
Positive research
1.3 Overview of Theories of Accounting
Predictive Theories
9. There are two types of accounting research being labelled by the researcher on the overview of theories of accounting which are________.
Positive research and negative research
Normative research and negative research
Normative research and positive research
Deductive research and normative research
1.5 Can we prove a theory?
10. Research that seeks to predict and explain particular phenomena is classified as ____________ and the associated theories are referred to as ____________ .
Prescriptive researcher, Perfect theories
Descriptive researcher, Negative theories
Negative researcher, Negative theories
Positive researcher, Positive theories
1.5 Can we prove a theory?
11. Popper and the falsificationists, consider that knowledge develops through ____________ .
Searching information
Trial and error
Examination and evaluation
Experience
1.6 Evaluating theories – logic & evidence
Positive Theories
12. Positive Accounting Theory is developed by
Hussey and Hussey (1997)
Kuhn (1962)
Watts and Zimmerman (1978)
Walk and Tearney (1997)
1.6 Evaluating theories – logic & evidence
Prescriptive (normative) Theories
13. There are two classification of normative theories one is true income theory and another one is ________
Positive theory
Deductive reasoning
Decision usefulness theory
Inductive reasoning
1.6 Evaluating theories – logic & evidence
Prescriptive (normative) Theories
14. What is the general purpose of financial reporting?
Financial reports that are tailored to the particular information needs of users
Financial reports intended to meet the needs of users who are not in position to require entity to prepare reports tailored to their particular information needs
Financial reports provide information about the reporting entity that is useful to present and potential equity investors, lenders, and other creditors in making decision in their capacity as capital providers
All above
1.6 Evaluating theories – logic & evidence
Prescriptive (normative) Theories
15. How does the conceptual framework differ from an accounting standard?
The principles in the conceptual framework are specific in nature while accounting standards provide more general requirement for financial reporting
The principles in the conceptual framework are designed to provide guidance and apply to a limited range of decisions relating to the preparation of financial reports while accounting standards apply to a wider range of decision relating to the preparation of financial reports
The principles in the conceptual framework are general concepts while accounting standards provide specific requirements for particular area of financial reporting
All above
1.6 Evaluating theories – logic & evidence
Prescriptive (normative) Theories
16. The conceptual framework identifies a limited range of primary users of financial statements. Which of the following best describe the users
Capital providers and current investors
Investors, creditors, customers, and general public
Resources provider, lenders, and board of director
Present and potential equity investors, lenders, and other creditors
1.6 Evaluating theories – logic & evidence
Prescriptive (normative) Theories
17. Normative accounting theories and research seek to
Explain and predict particular phenomena based on observation
Prescribe particular approaches not driven by existing practices
Describe what is normal, or generally accepted, practice
All of the given options are correct
1.6 Evaluating theories – logic & evidence
Positive Theories
18. This are the limitation in the logic of an argument except
The use of polite toned words
Making a statement in which “all” is implied but “some” is true
The use of an argument of logically unsound form
Prestige by false credentials
1.6 Evaluating theories – logic & evidence
Positive Theories
19. According to Thouless (1974),the 'tricks' some writers often use to distract readers from limitations in the logic of an argument or theory are________
Diversion to another question, to a side issue, or by irrelevant objection
Evasion of a sound refutation of an argument by use of a sophisticated formula
Changing the meaning of a term during the course of an argument
All of the given options are correct
1.6 Evaluating theories – logic & evidence
Positive Theories
20. Various accounting research journals show that many studies that adopt Positive Accounting Theory as theoretical basis of the argument fail to generate findings consistent with the theory (however, some do). Why there is criticism towards this theory?
i. Have been criticized for not providing prescription
ii. Failure to support a theory due to data being inappropriately collected
iii. Provide several choices which any of it could be correct
iv. Lack of empirical observation
ii and iii
iii and iv
i and ii
i, ii and iv
1.1 What is theory?
21. A coherent system of interrelated objectives and fundamentals that can lead to consistent standards. The use of the word “coherent” reflects a view that the components of a theory should logically combine together to provide explanation or guidance in respect of certain phenomena
TRUE
FALSE
1.2 Why is it importance?
22. Accountant and non-accountants have a rise in high-profile accounting failures raised the level of awareness and this led to a substantial reduction in the level of trust between the non-accountant and financial accountant
TRUE
FALSE
1.3 Overview of Theories of Accounting
Inductive Theories
23. Are the theories of accounting, mostly being developed on the basis of observation which is what accountants actually did in practice.
TRUE
FALSE
1.3 Overview of Theories of Accounting
Prescriptive (normative) Theories
24. Because there is no solution in deciding what asset measurement basis should be use between the normative researcher, at the end they decide that historical cost approach to accounting is continuing to be used
TRUE
FALSE
1.3 Overview of Theories of Accounting
Prescriptive (normative) Theories
25. Normative theories of accounting are necessarily based on observation not based on particular actions, therefore it cannot be evaluated on whether they reflect actual accounting practice.
TRUE
FALSE
1.3 Overview of Theories of Accounting
Predictive Theories
26. Positive theories can initially be developed through some form of deductive (logical) reasoning.
TRUE
FALSE
1.3 Overview of Theories of Accounting
Predictive Theories
27. Predictive (positive) theories tend to be based on what researcher believes.
TRUE
FALSE
1.4 Evaluating Theories
28. Paradigm can be defined as an approach to knowledge advancement that adopt particular theoretical assumption, research goals and research method. – Kuhn(1962)
TRUE
FALSE
1.5 Can we prove a theory?
29. Theory of financial accounting and therefore theory that describe human behaviour in relation to accounting number would provide perfect prediction of behaviour in all cases.
TRUE
FALSE
1.6 Evaluating theories – logic & evidence
Evaluate Logical Deduction
30. The difference between inductive reasoning and deductive reasoning is the deductive reasoning are based on observation while inductive reasoning is more on the use of logic
TRUE
FALSE
1.6 Evaluating theories – logic & evidence
Evaluate Logical Deduction
31. In evaluate the logical deduction, the conclusion or prediction may be rejected if the one of premises is untrue/doubt
TRUE
FALSE
1.6 Evaluating theories – logic & evidence
Positive Theories
32. The basis of positive accounting theory is based on 'rational economic person' assumption.
TRUE
FALSE
1.6 Evaluating theories – logic & evidence
Positive Theories
33. Many studies that adopt positive accounting theory as theoretical basis of argument success to generate finding consistent with the theory
TRUE
FALSE
1.6 Evaluating theories – logic & evidence
Prescriptive (normative) Theories
34. The normative theories are developed with deductive reasoning which provide prescribe method and it is empirically tested
TRUE
FALSE
1.6 Evaluating theories – logic & evidence
35. Faithful representation has been criticized because it does not capture the true value of accounting transactions
TRUE
FALSE
1.7 Theory construction and verification
36. Accounting theory should be the result of process of theory construction and process of theory of normative .
TRUE
FALSE
1.7 Theory construction and verification
37. Theory should be subject to logical or empirical testing to verify its accuracy
TRUE
FALSE
1.7 Theory construction and verification
38. Generally accepted accounting principles guide the accounting profession in the choice of accounting techniques and in the preparation of financial statement.
TRUE
FALSE
1.7 Theory construction and verification
39. Verification in research and analysis may refer to many things which are (you may tick more than one answer)
i.Applicability of formula/document
ii.Trustworthiness of reports
iii.Authenticity of documents
iv.Dynamic nature of financial accounting
i
ii
iii
iv
1.7 Theory construction and verification
40.What two approaches does traditional approach cover?
(you may tick more than one answer)
Theoretical approach which consist of deductive, inductive, eclectic approach
Non-Theoretical approach which consist of pragmatic, ethical, sociological approach
Regulative approach
Non-Theoretical approach
