Filters
Question type
Study Flashcards

Which of the following is not true regarding the imperatives of ARS 1?


A) They are normative in nature.
B) They have developed within the context of accounting practice.
C) They are objectives that should be striven for.
D) The key imperative postulate appears to be consistency.

E) B) and C)
F) A) and D)

Correct Answer

verifed

verified

Who are residual equity holders?


A) Preferred stockholders
B) Managers
C) Bondholders
D) Common stockholders

E) A) and B)
F) All of the above

Correct Answer

verifed

verified

Distinguish between proprietary theory and entity theory. Include descriptions of the balance sheet equation used by each and how income is computed.

Correct Answer

verifed

verified

Proprietary theory assumes that the owne...

View Answer

Which of the following is not a possible outcome of postulate C-4, stability of the monetary unit?


A) If purchasing power of the monetary unit is not stable, some form of inflation accounting is appropriate.
B) If purchasing power of the monetary unit is not stable, historical cost is still justified.
C) If purchasing power of the monetary unit is stable, a system of current values is justified.
D) If purchasing power of the monetary unit is stable, retention of historical cost is justified.

E) B) and C)
F) A) and B)

Correct Answer

verifed

verified

The key imperative postulate in ARS 1 appears to be stability of the monetary unit.

A) True
B) False

Correct Answer

verifed

verified

What is the going-concern postulate of ARS 1, and how has it been criticized?

Correct Answer

verifed

verified

The going-concern postulate states that ...

View Answer

Distinguish between a postulate and a principle as they are used in ARS 1 and ARS 3. Identify the major categories of each that are included in these two studies.

Correct Answer

verifed

verified

Postulates are basic assumptions concern...

View Answer

Which of the following concepts focuses on preparers of financial information?


A) Comparability
B) Consistency
C) Uniformity
D) Both b and c

E) B) and C)
F) A) and B)

Correct Answer

verifed

verified

Discuss the residual equity theory and its assumptions. Include a description of the accounting equation used and how income would be computed.

Correct Answer

verifed

verified

The residual equity theory is a variant ...

View Answer

Some capital markets research has indicated that "bad news" relative to reported earnings has a greater impact upon security prices than "good news."

A) True
B) False

Correct Answer

verifed

verified

Which of the following statements is true regarding ARS 3?


A) One of its principles states that revenue is earned by the entire process of operations of the firm rather than at the point of sale.
B) All of its principles were derived from the postulates of ARS 1.
C) The asset valuation measures prescribed are additive.
D) One of the main criticisms aimed at ARS 3 relates to its advocating the exit-value approach to asset valuation.

E) B) and C)
F) A) and C)

Correct Answer

verifed

verified

Consistency refers to the degree of reliability users should find in financial statements when evaluating financial condition or the results of operations on an interfirm basis or predicting income or cash flows.

A) True
B) False

Correct Answer

verifed

verified

Which of the following is a true statement regarding Moonitz's approach to ARS 1?


A) He initially rejected an inductive type of approach.
B) He used symbolic terminology and formal methods.
C) He rejected a deductive approach rooted in reasoning alone.
D) He was unconcerned about the experiential and empirical aspects of accounting.

E) A) and D)
F) A) and C)

Correct Answer

verifed

verified

Which of the following are the basic postulates underlying historical costing?


A) Going Concern, Time Period, Market Prices, Monetary Unit
B) Objectivity, Time Period, Accounting Entity, Monetary Unit
C) Going Concern, Time Period, Accounting Entity, Monetary Unit
D) Going Concern, Time Period, Financial Statements, Monetary Unit

E) A) and D)
F) All of the above

Correct Answer

verifed

verified

C

Which of the following concepts applies to users of financial statements?


A) Comparability
B) Consistency
C) Uniformity
D) Both b and c

E) A) and B)
F) None of the above

Correct Answer

verifed

verified

Accounting concepts have largely evolved from practical operating necessities, including income tax laws.

A) True
B) False

Correct Answer

verifed

verified

True

Which of the following is the key group in Moonitz's set of postulates?


A) The Environmental group
B) The Imperatives
C) The Economic group
D) Postulates stemming from accounting itself

E) None of the above
F) A) and B)

Correct Answer

verifed

verified

What were the reasons for the failure of ARS 1 and ARS 3?

Correct Answer

verifed

verified

ARS 1 and ARS 3 failed for several reaso...

View Answer

Discuss the revenue recognition principle and how the terms "critical event," "earned," "realized," and "realizable" apply to revenue recognition.

Correct Answer

verifed

verified

The most prevalent revenue recognition point is at the point of sale. Other possibilities may arise, however, such as the firm's "critical event." The critical event is the operation function that is the most crucial in terms of the earning process. However, ARS 3 states that revenue is earned by the entire process of operations of the firm rather than at one point only. The conceptual framework of the FASB states that revenue recognition occurs in accordance with two criteria: (1) the assets to be received from the performance of the revenue function are realized or realizable; and (2) performance of the revenue function is "substantially accomplished" (earned). Realized means that the firm's product or service has been converted to cash or claims to cash, while realizable has been defined as the ability to convert assets already received or held into known amounts of cash or claims to cash.

Proprietary theory assumes that the owners and the firm are virtually identical.

A) True
B) False

Correct Answer

verifed

verified

Showing 1 - 20 of 66

Related Exams

Exam 1

An Introduction to Accounting Theory

61 Questions

Exam 2

Accounting Theory and Accounting Research

73 Questions

Exam 3

Development of Institutional Structure of Financial Accounting

66 Questions

Exam 4

The Economics of Financial Reporting Regulation

66 Questions

Exam 6

The Search for Objectives

61 Questions

Exam 7

The Fasbs Conceptual Framework

59 Questions

Exam 8

Usefulness of Accounting Information to Investors and Creditors

69 Questions

Exam 9

Uniformity and Disclosure: Some Policy Making Directions

58 Questions

Exam 10

International Accounting

59 Questions

Exam 11

The Balance Sheet

61 Questions

Exam 12

The Income Statement

66 Questions

Exam 13

Statements of Cash Flows

57 Questions

Exam 14

Accounting for Inflation and Changing Prices

55 Questions

Exam 15

Income Taxes and Financial Accounting

53 Questions

Exam 16

Pensions and Other Postretirement Benefits

77 Questions

Exam 17

Leases

66 Questions

Exam 18

Intercorporate Equity Investments

90 Questions

Show Answer