Question 1

Applying a scientific approach to accounting is an attempt to make scientists out of accounting practitioners.

Accepted Answer

Applying a scientific approach to accounting means using rigorous methods, data analysis, and empirical evidence to support decisions and findings. It does not necessarily require practitioners to become scientists or to adopt all the practices and values of the scientific community.

Question 2

Normative theory researchers in the 1950s and 1960s concentrated on deriving a single measure for assets and a correct profit figure,even though there was no agreement on what constituted a correct or true measure of value and profit.

Accepted Answer

This statement accurately reflects the focus of normative theory researchers in the 1950s and 1960s. They were attempting to establish a universal method for measuring assets and calculating profits, despite the lack of consensus on how to define value and profit.

Question 3

Mautz and Sharaf,in 1961,attempted to generalise the existing auditing literature and provide a comprehensive theory of auditing.

Accepted Answer

Mautz and Sharaf did indeed attempt to provide a comprehensive theory of auditing in 1961.

Question 4

The research question that is most unlikely to be tested using positive methodology is:
A)Which firms are more likely to use straight-line depreciation rather than diminishing-balance depreciation?
B)How do changes in tax rules affect firm's leverage position?
C)Are firms with more intangible assets more likely to repurchase their shares?
D)Is the quantitative data derived from given sets of operations based on an overall accounting theory,useful to users of financial statements?

Accepted Answer

Positive methodology focuses on empirical observation and testing of hypotheses based on quantitative data. The research question in option D is more focused on the usefulness of financial data to users and may require a more subjective approach that cannot be tested using positive methodology. Options A, B, and C can be tested using positive methodology since they are focused on observable and measurable variables.

Question 5

The psychological pragmatic approach differs from the descriptive pragmatic approach in that under the psychological approach,the users' response to accounting information is observed rather than the accountants' behaviour.

Accepted Answer

The statement accurately describes the difference between the psychological pragmatic approach and the descriptive pragmatic approach. Under the psychological approach, the focus is on observing how users of accounting information respond to it, while under the descriptive approach, the focus is on describing the behavior of accountants who produce the information.

Question 6

Which of these statements is a criticism levelled at syntactic and semantic accounting theories?
A)There will be a great number of accounting techniques which are different but still acceptable under general accounting principles of practice
B)The assumptions underlying the theories were rarely subjected to empirical testing
C)The theories developed are not prescriptive,that is they do not guide accounting practice
D)It does include an analytical judgement of the quality of an accountant's actions

Accepted Answer

The answer of Which of these statements is a criticism...

Question 7

Recent experimental auditing research has found a negative link between the size of audit firms and the quality of audits performed,i.e.the larger the firm the poorer the audit.

Accepted Answer

Most research indicates that larger audit firms, often referred to as the Big Four, generally provide higher quality audits compared to smaller firms. This is attributed to their extensive resources, deeper expertise across industries, and stronger adherence to auditing standards.

Question 8

Positive and normative theories are mutually exclusive;it is not possible for the theories to complement each other.

Accepted Answer

Positive and normative theories are not mutually exclusive and can complement each other in certain ways. Positive theories focus on describing and explaining facts and behavior, while normative theories focus on prescribing what should or ought to be done based on values and beliefs. Positive theories can provide the foundation for normative ones by helping to understand the consequences of different actions or policies. Normative theories can provide guidance for decision-making and evaluation of policies based on ethical and moral values, which is something that positive theories cannot do. Therefore, these two types of theories can work together to provide a comprehensive understanding of a subject.

Question 9

The concept of realism under the decision-usefulness approach asserts that for an accounting theory to be valid it must hold as a description of the reality that underlies the accounting phenomena.

Accepted Answer

The statement accurately describes the concept of realism under the decision-usefulness approach in accounting.

Question 10

Under the naturalistic approach to research an appropriate research methodology is case studies.

Accepted Answer

Under the naturalistic approach to research, case studies are an appropriate research methodology as they involve observing and analyzing a particular situation or individual in a naturalistic setting, allowing for a more in-depth and holistic understanding of the phenomenon being studied.

Question 11

Under the Morgan and Smircich classification,Category 1 assumes that the world is unstable and that individuals do not share a common understanding of how the world works.

Accepted Answer

Category 1 under the Morgan and Smircich classification assumes that reality is objective and external, and that people share a common understanding of the world, which contrasts with the statement provided.

Question 12

The naturalistic approach to theory development looks at specific situations to understand what is happening in that particular situation - generalisability is not an underlying concern.

Accepted Answer

The naturalistic approach is focused on understanding the specific context or situation, without necessarily seeking to generalize findings to other contexts. Therefore, generalizability is not always a primary concern in this approach to theory development.

Question 13

The main difference between normative and positive theories is that normative theories are descriptive whereas positive theories are prescriptive.

Accepted Answer

The statement is incorrect. Normative theories are prescriptive, giving recommendations on how things should be, while positive theories are descriptive, describing how things are in reality.

Question 14

The descriptive pragmatic approach to accounting theory construction is a deductive approach as it is based upon continual observation of accountants in order to copy their accounting procedures and principles.

Accepted Answer

The descriptive pragmatic approach to accounting theory construction is actually an inductive approach, where theory is developed based on observing accounting practices and principles in the real world. It is not simply copying what accountants do, but rather developing a theoretical understanding of why and how they do it.

Question 15

Concentrating on decision theories and testing them on large samples of people overcomes a major criticism of which of the following approaches to accounting theory construction?
A)The positive approach
B)The psychological pragmatic approach
C)The naturalistic approach
D)The descriptive pragmatic approach

Accepted Answer

The psychological pragmatic approach to accounting theory construction has been criticized for its lack of empirical testing and reliance on subjective interpretations. By concentrating on decision theories and testing them on large samples of people, this approach can overcome the mentioned criticism.

Question 16

Which of these is not an assumption used in normative theory construction?
A)Financial accounting is useful for making economic decisions
B)There are multiple available profit measures
C)Markets are inefficient and can be fooled by 'creative accountants'
D)All of the above are not assumptions used in normative theory construction

Accepted Answer

The answer of Which of these is not an assumption...

Question 17

The criticism of traditional historical cost accounting that is based on a Popperian approach to science is:
A)Accounting reports prepared using traditional historical cost accounting may have perfect syntax but little value in practice
B)The existence of accounting doublethink
C)Many of the propositions of historical cost accounting are not falsifiable
D)All of the above

Accepted Answer

The criticism of traditional historical cost accounting based on a Popperian approach to science is that many of its propositions are not falsifiable. This means that they cannot be tested or proven true or false through empirical evidence, which undermines the reliability and objectivity of the accounting method. The other choices (A and B) are also valid criticisms, but they are not specifically related to the Popperian approach.

Question 18

The statement that is false is:
A)Normative theories rely on both semantic and syntactic approaches
B)Questionnaires are often used by positive theorists to test accounting hypotheses
C)Naturalistic research starts with an accepted theory and when an anomaly occurs a new theory is developed to explain it
D)Normative theorists hold the assumptions that accounting should be a measurement system and that there is only one unique profit measure

Accepted Answer

Naturalistic research starts with observation and data collection, rather than an accepted theory. When anomalies occur, researchers develop theories to explain the observed phenomena. Therefore, the statement in option (C) is false.

Question 19

Results from naturalistic research may be more difficult to generalise compared to results from scientific research.

Accepted Answer

Naturalistic research often involves studying a specific group or context, making it more challenging to generalise findings to larger populations or different contexts. Scientific research, on the other hand, often involves controlled experiments that allow for more generalisations to be made about cause and effect.

Question 20

Which of these is not a criticism of the descriptive pragmatic approach to theory construction?
A)It does not allow for accounting techniques to be challenged
B)Some of the users of accounting information may be illogical in their responses
C)The focus is on the accountant's behaviour not on measuring the attributes of the firm
D)There is no assessment of whether the accountant reports in the way he or she should

Accepted Answer

The descriptive pragmatic approach to theory construction focuses on describing how accounting is practiced, including how accountants behave and how accounting information is used. Criticism B, which mentions the illogical responses of some users of accounting information, does not directly relate to the approach itself but rather to the behavior of the information's users, making it not a criticism of the descriptive pragmatic approach.

Quiz 2: Accounting Theory Construction

Applying a scientific approach to accounting is an attempt to make scientists out of accounting practitioners.

Normative theory researchers in the 1950s and 1960s concentrated on deriving a single measure for assets and a correct profit figure,even though there was no agreement on what constituted a correct or true measure of value and profit.

Mautz and Sharaf,in 1961,attempted to generalise the existing auditing literature and provide a comprehensive theory of auditing.

The research question that is most unlikely to be tested using positive methodology is:

The psychological pragmatic approach differs from the descriptive pragmatic approach in that under the psychological approach,the users' response to accounting information is observed rather than the accountants' behaviour.

Which of these statements is a criticism levelled at syntactic and semantic accounting theories?

Recent experimental auditing research has found a negative link between the size of audit firms and the quality of audits performed,i.e.the larger the firm the poorer the audit.

Positive and normative theories are mutually exclusive;it is not possible for the theories to complement each other.

The concept of realism under the decision-usefulness approach asserts that for an accounting theory to be valid it must hold as a description of the reality that underlies the accounting phenomena.

Under the naturalistic approach to research an appropriate research methodology is case studies.

Under the Morgan and Smircich classification,Category 1 assumes that the world is unstable and that individuals do not share a common understanding of how the world works.

The naturalistic approach to theory development looks at specific situations to understand what is happening in that particular situation - generalisability is not an underlying concern.

The main difference between normative and positive theories is that normative theories are descriptive whereas positive theories are prescriptive.

The descriptive pragmatic approach to accounting theory construction is a deductive approach as it is based upon continual observation of accountants in order to copy their accounting procedures and principles.

Concentrating on decision theories and testing them on large samples of people overcomes a major criticism of which of the following approaches to accounting theory construction?

Which of these is not an assumption used in normative theory construction?

The criticism of traditional historical cost accounting that is based on a Popperian approach to science is:

The statement that is false is:

Results from naturalistic research may be more difficult to generalise compared to results from scientific research.

Which of these is not a criticism of the descriptive pragmatic approach to theory construction?