Question 1

Which of the following would be considered a political factor relative to the financial accounting policy function?
A)Auditors
B)Inflation
C)Taxes
D)Price changes

Accepted Answer

Auditors are considered a political factor as they are responsible for ensuring that financial statements are in compliance with government regulations and laws, which are subject to political influence and changes. Inflation, taxes, and price changes are economic factors.

Question 2

Which of the following factors is not listed in your text as affecting a direct assessment measure?
A)The measurer
B)The attribute being measured
C)Instruments available for the measuring task
D)The individual who will use the measure

Accepted Answer

The individual who will use the measure is not listed as affecting a direct assessment measure in the text. The other options (A, B, and C) are all listed as factors that can affect a direct assessment measure.

Question 3

Which of the following methods of valuing an asset is based on the amount that would be paid for it in markets where the asset would ordinarily be acquired?
A)Replacement cost
B)Entry value
C)Exit value
D)Both a and b

Accepted Answer

Replacement cost and entry value both consider the amount that would be paid for an asset in markets where the asset would ordinarily be acquired. Replacement cost focuses on the cost to replace an asset with a similar one, while entry value looks at the price to acquire an equivalent asset.

Question 4

There are often trade-offs between objectivity and the usefulness of numbers generated by the measurement process.

Accepted Answer

Objectivity often involves rigid rules and standardized procedures, which may not capture the nuances of the phenomenon being measured. On the other hand, useful numbers may reflect subjective judgment calls or rely on measures that may not be entirely reliable or valid. Thus, there is a trade-off between objectivity and the usefulness of the numbers generated by measurement.

Question 5

Calculations attempt to simulate or come as close as possible to the measurement of real phenomena or attributes.

Accepted Answer

The answer of Calculations attempt to simulate or come as...

Question 6

FIFO and LIFO measures of cost of goods sold and inventories are examples of calculations rather than measurements.

Accepted Answer

FIFO and LIFO methods involve calculations based on assumptions about the flow of inventory, rather than direct measurements of actual costs or quantities. Therefore, they are considered examples of calculations rather than measurements.

Question 7

The principal argument used to justify the replacement cost system over exit values is that if the great majority of the firm's assets were not already owned, it would be economically justifiable to acquire them.

Accepted Answer

The argument is that if the replacement cost of the firm's assets is lower than their exit values, it would make economic sense to acquire those assets rather than exiting the business. This justifies the use of the replacement cost system over the exit value system.

Question 8

Which measurement scale indicates an order of preference but not the degree of preference among ranks?
A)Interval scale
B)Ratio scale
C)Nominal scale
D)Ordinal scale

Accepted Answer

An ordinal scale indicates order or ranking of items, but does not provide information about the degree of difference between the items. Therefore, it is the best choice for indicating order of preference but not degree of preference among ranks.

Question 9

The simplest type of measuring system is the:
A)interval scale.
B)ratio scale.
C)nominal scale.
D)ordinal scale.

Accepted Answer

The simplest type of measuring system is the nominal scale, where data is categorized into non-numeric labels or names. It does not provide any quantitative information or order of values. Examples include gender, marital status, and nationality.

Question 10

The terms calculation and measurement both refer to the valuation of a real phenomena or attribute.

Accepted Answer

Calculation involves using mathematical operations to determine a value, while measurement involves obtaining a value through direct observation or use of instruments.

Question 11

Measurement is an integral part of accounting theory.

Accepted Answer

Measurement is a key aspect of accounting theory as it provides a quantitative basis for recording, analyzing, and reporting financial information. It allows for the objective evaluation of assets, liabilities, revenues, and expenses, which are important elements of financial statements. Without measurement, accounting information would lack accuracy and reliability, making it difficult for stakeholders to make informed decisions.

Question 12

The use of which of the following types of measurement scales in accounting allows meaningful comparisons among similar accounting measurements for different firms?
A)Interval scale
B)Ratio scale
C)Nominal scale
D)Ordinal scale

Accepted Answer

The ratio scale is the most appropriate type of measurement scale in accounting as it allows for meaningful comparisons among similar accounting measurements for different firms. This is because the ratio scale has an absolute zero point and allows for ratios to be formed, such as the ratio of one firm's net income to another's. The other measurement scales (nominal, ordinal, and interval) do not have an absolute zero point and do not allow for ratio comparisons.

Question 13

For which measurement scale must the change in the attribute measured among assigned numbers be equal?
A)Interval scale
B)Ratio scale
C)Ordinal scale
D)Both a and b

Accepted Answer

The interval and ratio scales both require that the change in the attribute measured among assigned numbers be equal. The interval scale has equal intervals between values but no true zero point, while the ratio scale has both equal intervals and a true zero, allowing for the calculation of ratios.

Question 14

Which of the following groups carry out most accounting research?
A)Public accounting firms
B)Private industry
C)Accounting professors
D)Chartered Financial Analysts

Accepted Answer

Accounting professors carry out the most accounting research as they are often employed by universities and have a focus on conducting research and publishing academic papers. Public accounting firms and private industry may conduct some research, but their primary focus is on providing accounting services or improving their bottom line. Chartered Financial Analysts may conduct research on accounting topics, but it is not their primary role or focus.

Question 15

Which of the following methods of valuing an asset is based on the amount that a firm could acquire by selling the asset?
A)Replacement cost
B)Entry value
C)Exit value
D)Both a and b

Accepted Answer

Exit value is based on the amount that a firm could acquire by selling an asset. Replacement cost and entry value are based on the cost of acquiring or replacing an asset, rather than the amount that could be obtained by selling it. Therefore, the best choice is C.

Question 16

Throughout the financial history of the United States, current value has been the accepted valuation system for published financial statements.

Accepted Answer

Historically, the United States has primarily used historical cost as the accepted valuation system for published financial statements, not current value.

Question 17

A general price-level adjustment refers to the purchasing power of the monetary unitary unit relative to all goods and services in the economy.

Accepted Answer

A general price-level adjustment, also known as inflation, refers to the overall increase in the prices of goods and services in the economy relative to the purchasing power of the monetary unit. This can have a significant impact on the economy and can affect individuals' purchasing power, savings, and investments.

Question 18

Both exit value and replacement cost are valuation systems that fall into the current value category.

Accepted Answer

Both exit value and replacement cost are focused on determining the current value of an asset or property. Exit value refers to the price at which an asset can be sold in the current market, while replacement cost calculates the cost of replacing an asset at its current value. Both methods consider the current market conditions and are therefore categorized as current value valuation systems.

Question 19

If a number assigned to an object is an actual measurement of a property of the object, it is referred to as a(n):
A)direct measurement.
B)biased measurement.
C)indirect measurement.
D)prediction measurement.

Accepted Answer

A direct measurement is when a number assigned to an object is an actual measurement of a property of the object, meaning it is measured directly without any inference or estimation.

Question 20

The discounted cash flow approach can be used to determine an objective measurement for most assets and liabilities.

Accepted Answer

The discounted cash flow approach is primarily used for valuing investments, projects, or companies, but it may not be suitable for all assets and liabilities, especially those without predictable cash flows.

Quiz 1: An Introduction to Accounting Theory

Which of the following would be considered a political factor relative to the financial accounting policy function?

Which of the following factors is not listed in your text as affecting a direct assessment measure?

Which of the following methods of valuing an asset is based on the amount that would be paid for it in markets where the asset would ordinarily be acquired?

There are often trade-offs between objectivity and the usefulness of numbers generated by the measurement process.

Calculations attempt to simulate or come as close as possible to the measurement of real phenomena or attributes.

FIFO and LIFO measures of cost of goods sold and inventories are examples of calculations rather than measurements.

The principal argument used to justify the replacement cost system over exit values is that if the great majority of the firm's assets were not already owned, it would be economically justifiable to acquire them.

Which measurement scale indicates an order of preference but not the degree of preference among ranks?

The simplest type of measuring system is the:

The terms calculation and measurement both refer to the valuation of a real phenomena or attribute.

Measurement is an integral part of accounting theory.

The use of which of the following types of measurement scales in accounting allows meaningful comparisons among similar accounting measurements for different firms?

For which measurement scale must the change in the attribute measured among assigned numbers be equal?

Which of the following groups carry out most accounting research?

Which of the following methods of valuing an asset is based on the amount that a firm could acquire by selling the asset?

Throughout the financial history of the United States, current value has been the accepted valuation system for published financial statements.

A general price-level adjustment refers to the purchasing power of the monetary unitary unit relative to all goods and services in the economy.

Both exit value and replacement cost are valuation systems that fall into the current value category.

If a number assigned to an object is an actual measurement of a property of the object, it is referred to as a(n) :

The discounted cash flow approach can be used to determine an objective measurement for most assets and liabilities.