Question 1

Measurement is an integral part of accounting theory.

Accepted Answer

Measurement is a fundamental concept in accounting theory. It involves quantifying financial information about an entity's economic activities, such as its assets, liabilities, revenues, and expenses. The accuracy and reliability of financial data are dependent on proper measurement techniques and methodologies.

Question 2

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

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 3

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 implies that under the replacement cost system, the firm can justify the acquisition of new assets because the cost of acquiring them can be recovered in the future through their replacement value. This argument does not hold for exit values, which are based on the market value of assets and may not reflect the cost of acquiring new assets.

Question 4

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

Accepted Answer

Exit value is the method of valuing an asset based on the amount that a firm could acquire by selling the asset. Replacement cost and entry value are not based on the sale price of an asset, but rather on the cost of acquiring or replacing the asset. Therefore, choice C is the best choice as it accurately answers the question.

Question 5

Which of the following groups carry out most accounting research?

Accepted Answer

Accounting professors carry out most accounting research, as they are involved in teaching and conducting research in universities and colleges. Public accounting firms and private industry also conduct research, but their focus is on practical applications for their clients or organizations. Chartered Financial Analysts may conduct research related to finance and investment, but their scope is more specialized compared to that of accounting professors.

Question 6

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

Accepted Answer

The answer of The discounted cash flow approach can be...

Question 7

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

Accepted Answer

Ratio scale measurements allow for meaningful comparisons among similar accounting measurements for different firms because they have a meaningful zero point and a consistent unit of measurement. This allows for ratios to be calculated and compared, such as the ratio of a firm's current assets to its current liabilities. Interval and ordinal scales do not have a meaningful zero point, and nominal scales only allow for categorization without meaningful numeric comparisons.

Question 8

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

Accepted Answer

The individual who will use the measure is not listed in the text as affecting a direct assessment measure. The other factors (measurer, attribute being measured, instruments available) can all have an impact on the validity and reliability of a direct assessment measure.

Question 9

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?

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 10

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

Accepted Answer

Objectivity in measurement aims to produce data that are unbiased and independent of human opinion or interpretation. However, in some cases, subjective judgments or qualitative data may be more useful than objective measures. Therefore, there may be a trade-off between achieving complete objectivity and generating data that are more useful for analysis and decision-making.

Question 11

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

Accepted Answer

The answer of The terms calculation and measurement both refer...

Question 12

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

Accepted Answer

The ordinal scale indicates an order of preference or ranking, but it does not measure the degree of preference. For example, in a survey asking respondents to rank their favorite ice cream flavors, a respondent may rank chocolate as their favorite and vanilla as their second favorite, but the scale does not indicate how much more the respondent prefers chocolate over vanilla. Therefore, the ordinal scale is the best choice for indicating a rank order of preference without measuring degrees of preference.

Question 13

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 14

The simplest type of measuring system is the:

Accepted Answer

Nominal scale is the simplest type of measuring system where data is categorized into labels or named categories without any quantitative value associated with it. This means that there is no inherent order or ranking to the data, making it easy to analyze and interpret. Interval scale, ordinal scale, and ratio scale involve some form of quantitative measurement and are more complex than nominal scale.

Question 15

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

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 16

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

Accepted Answer

FIFO and LIFO are methods of calculating cost of goods sold and inventories, based on the assumption of the order in which goods are purchased or produced. They are not measurements in the sense of directly quantifying the value of goods, but rather are calculations based on specific assumptions and accounting principles.

Question 17

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 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 current value methods of valuation.

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):

Accepted Answer

Direct measurement involves obtaining a numerical value of a quantity or property by directly measuring it, such as measuring the length of an object with a ruler or measuring the weight of an object with a scale. This type of measurement is considered the most accurate and reliable because it is obtained directly from the object being measured.

Question 20

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 does refer to the purchasing power of the monetary unitary unit relative to all goods and services in the economy.

Quiz 1: An Introduction to Accounting Theory