Deck 5: Theories in Accounting

Question 1

According to institutional theory which of the following statements is NOT true about corporate social and environmental disclosure:

A)Within industries the nature of the disclosure is likely to diverge over time.
B)It will be heavily influenced by regulation.
C)Well organised external stakeholders will lead to increased disclosure.
D)None of the above,i.e.they are all true.

Answer 1

A

Question 2

A positive theory:

A)Is based on what should be the case given a certain objective.
B)Is completely divorced from reality.
C)Describes,explains or predicts activities.
D)Only focuses on rewarding activities.

Answer 2

C

Question 3

Which of the following is NOT one of the four ways an organisation can obtain or maintain organisational legitimacy according to Lindblom?

A)Change its behaviour.
B)Change perceptions of society,without changing its own behaviour.
C)Manipulate perceptions by deflecting attention from societal concerns.
D)None of the above,i.e.they are all ways an organisation can obtain or maintain legitimacy.

Answer 3

D

Question 4

Stakeholder theory:

A)Has both a normative and positive version.
B)Is completely different to legitimacy theory.
C)Focuses on government power.
D)All of the above.

Question 5

Which of the following is NOT considered a stakeholder according to the managerial branch of stakeholder theory?

A)Customers.
B)Communities.
C)Competitors.
D)None of the above,i.e.they are all considered stakeholders.

Question 6

Agency theory concentrates on:

A)two agency relationships.
B)multiple agency relationships.
C)one agency relationship.
D)three agency relationships.

Question 7

Agency theory would hold that managers on compensation contracts which have bonuses tied to a current measure of performance would prefer to:

A)Smooth income using either expensing or capitalising.
B)Be indifferent to expensing or capitalising transactions.
C)Expense transactions rather than capitalise them.
D)Capitalise transactions rather than expense them.

Question 8

The central proposition of contingency theory is:

A)Organisational performance depends on the fit between organisational context and structure.
B)Institutional norms drive organisational structure.
C)Organisational performance is largely random and poorly understood.
D)Organisations are simply a nexus of contractual agreements.

Question 9

A normative theory:

A)Is based on what should be the case given a certain objective.
B)Is completely divorced from reality.
C)Describes,explains or predicts activities.
D)Only focuses on normal activities.

Question 10

Contingency theory proposes that:

A)Shareholder needs drive accounting system choices.
B)Accounting policies are likely to be consistent within industries.
C)Size is not an important factor when considering management accounting systems.
D)No universally consistent accounting system can apply to all organisations.

Question 11

Theories in accounting can help us to understand the decisions of:

A)Financial information regulators.
B)Financial information preparers.
C)Financial information users.
D)All of the above.

Question 12

According to stakeholder theory accounting information:

A)is usually misleading.
B)is seen as largely advertising.
C)is unimportant to most stakeholders.
D)is an important way to communicate with stakeholders.

Question 13

Legitimacy theory argues that disclosure practice.

A)The business of business is business.
B)Organisations can only continue to exist if they demonstrate values consistent with society at large.
C)Organisations should focus on wealth maximisation for their owners.
D)Consumers are only interested in minimising costs to themselves.

Question 14

Accounting theory helps us understand accounting better as:

A)A random process.
B)A fundamental part of the natural universe.
C)A human endeavour.
D)A representation of truth.

Question 15

Key problems for owner-manager agency relationships are:

A)dividend retention.
B)horizon problem.
C)risk aversion.
D)all of the above.

Question 16

Which of the following theories have been used to explain voluntary disclosure in the annual report?

A)Institutional Theory.
B)Stakeholder Theory.
C)Legitimacy Theory.
D)All of the above.

Question 17

A key underlying assumption of Institutional Theory is that people are:

A)Risk-adverse.
B)Self-interested.
C)Likely to conform to external norms.
D)All of the above.