Question 1

No systemic theory of accounting was devised from the time of Pacioli in the 15^th century until the opening of the 19^th century.

Accepted Answer

During this period, accounting practices were largely based on Pacioli's work and evolved through practical application rather than through the development of a formalized systemic theory.

Question 2

The period 1800 - 1955 has been labelled the empirical period in accounting development.

Accepted Answer

This is true. The empirical period in accounting development is characterized by an emphasis on gathering and analyzing data to improve accounting practices. This period saw the development of the double-entry bookkeeping system, the use of financial statements, and the establishment of accounting standards and principles.

Question 3

An example of a positive accounting theory is the bonus plan hypothesis.This predicts that managers who are not remunerated via bonus plans use profit-increasing accounting methods more than managers who are remunerated via bonus plan.

Accepted Answer

The bonus plan hypothesis actually predicts that managers who are remunerated via bonus plans are more likely to use profit-increasing accounting methods to increase their bonuses, not the other way around.

Question 4

The current Australian conceptual framework consists of SAC 1,SAC 2,SAC 3,and SAC 4.

Accepted Answer

The current Australian conceptual framework includes the following statements of accounting concepts: SAC 1 - Definition of the Reporting Entity, SAC 2 - Objective of General Purpose Financial Reporting, SAC 3 - Qualitative Characteristics of Financial Information, and SAC 4 - Definition and Recognition of Elements of Financial Statements. There are no SACs numbered 1, 2, 3 and 4 in the current framework.

Question 5

The statement that best defines what is meant by a theory is:
A)A coherent set of hypothetical,conceptual and pragmatic principles forming the general framework for a field of inquiry
B)A deductive system of statements of decreasing generality
C)A set of ideas used to explain real-world observations
D)All of the above

Accepted Answer

All of the options provided are correct definitions of a theory. Option A describes the conceptual framework that is used to guide a particular field of inquiry. Option B describes a logical system of statements that are derived from a set of axioms or assumptions. Option C describes the practical application of a theory in explaining empirical observations of the world. Hence, the statement that best defines theory is encompassed in all of the given options.

Question 6

The main purpose of accounting theory is to prescribe accounting rules for practitioners.

Accepted Answer

The main purpose of accounting theory is not to prescribe strict accounting rules, but rather to provide a conceptual framework for understanding accounting principles and practices. Accounting theory helps to inform the development of accounting standards, but it does not serve as a rigid set of rules for practitioners to follow without context or interpretation.

Question 7

Behavioural research,which is concerned with the broader sociological implications of accounting numbers and the associated actions of 'key players' as they react to accounting information,was first used in an accounting context in the 1980s.

Accepted Answer

Behavioral research in accounting, which examines the effects of accounting numbers on people's behavior and the broader sociological implications, began to emerge as a distinct area in the late 1960s and early 1970s, not the 1980s.

Question 8

The development of a conceptual framework has solved the problem of inconsistency in the application of accounting in practice.

Accepted Answer

While a conceptual framework helps improve financial reporting by providing a foundation for developing accounting standards, it does not completely solve the problem of inconsistency in the application of accounting in practice due to differences in interpretation, professional judgment, and the evolving nature of business transactions.

Question 9

While the accounting profession has sought to use accounting theories to unify accounting practice and make it more useful,academics use accounting theories to understand the role and impact of accounting information.Therefore,academic research on accounting is not useful for professional practice.

Accepted Answer

Academic research on accounting can provide insights and new perspectives that can be applied in professional practice. While the primary goal of academic research may not be to directly impact professional practice, the knowledge gained from such research can inform and improve accounting practices.

Question 10

The normative period of accounting theory ended because empirical testing proved the theories developed during this period to be false.

Accepted Answer

The normative period of accounting theory ended due to the increasing focus on positive accounting theory, which emphasized empirical testing and verification of accounting theories rather than normative prescriptions. While some theories developed during the normative period were found to be limited or incomplete, it was not solely due to empirical testing that this period ended.

Question 11

Which of these would be an example of normative research (research based upon a normative theory)?
A)A researcher,through observation,documents the breeding cycle of the gnat
B)An economist develops a method of using last month's share market prices to predict unemployment levels
C)In order to ensure consistency in schooling outcomes an education researcher recommends that all final year school students undertake the same six subjects for assessment purposes
D)An accounting researcher predicts that auditors will perform faster audits when the audit materials are presented in graphical rather than tabular form

Accepted Answer

The recommendation made by the education researcher is an example of normative research because it involves suggesting a course of action based on a particular normative theory of schooling outcomes.

Question 12

During the normative period of accounting theory development,theorists were concerned with explaining and understanding current accounting practice.

Accepted Answer

During the normative period, theorists focused on prescribing how accounting should be done, rather than explaining or understanding current practices.

Question 13

An example of an inconsistency in accounting practice is for a company to depreciate some of its assets using the straight-line method and some using the reducing-balance method.

Accepted Answer

Using different depreciation methods for different types of assets is not considered an inconsistency in accounting practice; it's a common practice to match the depreciation method with the nature and use of the asset to more accurately reflect its consumption of economic benefits over time.

Question 14

The rapid increase in demand for both management accounting and financial accounting information in the 1800s can be explained by:
A)The rapid development of technology during this time
B)The 'birth' of the corporation
C)Increasing separation of business management from ownership
D)All of the above

Accepted Answer

All of the above explanations played a role in the rapid increase in demand for management accounting and financial accounting information in the 1800s. The development of technology allowed for more efficient accounting practices, while the birth of the corporation and increasing separation of business management from ownership led to a need for more formalized accounting processes and reporting.

Question 15

The 'debt hypothesis' predicts that the larger the firm's debt to equity ratio,the more likely it is that the firm's manager will select accounting procedures that shift reported profits from future periods to current periods - this is to reduce the likelihood of the firm technically breaching its debt covenants.The theory underlying this hypothesis would be a positive theory.

Accepted Answer

The statement describes a positive theory, as it predicts behavior based on an economic theory and observable phenomena. The debt hypothesis suggests that managers will behave in a certain way based on their incentives and constraints, which is a key component of positive theories.

Question 16

Which of these characteristics is the least important for an accounting theory to be considered acceptable?
A)How well the accounting theory has been constructed
B)How acceptable the implications of the accounting theory are
C)How prescriptive the accounting theory is in relation to accounting practice
D)How well the accounting theory explains and predicts reality

Accepted Answer

While all of the characteristics listed are important for an accounting theory to be considered acceptable, how prescriptive the theory is in relation to accounting practice is the least important. This is because a theory can still be acceptable even if it does not provide specific guidance on how to apply it to accounting practice. The other characteristics listed are more essential for an accounting theory to be considered acceptable.

Question 17

The ultimate objective of international accounting standards is to make all countries use the same standards so that there are no differences in reported information across international reporting boundaries.

Accepted Answer

The ultimate objective of international accounting standards is to enhance comparability and transparency in financial reporting across different countries, not to eliminate all differences.

Question 18

As a result of accounting prescription being developed in a haphazard way there are follow-on inconsistencies in practice.

Accepted Answer

Accounting prescription has been developed over time through various regulations, standards, and practices. This has resulted in inconsistencies in how accounting is practiced and reported, leading to confusion and inefficiencies in financial reporting.

Question 19

The statement that best defines the term 'empirical analysis' is:
A)Reasoning from the general to specific statements
B)Testing the truth of a proposition by observing a subset of real world observations or events
C)Understanding practices,activities or behaviour based upon direct observations and/or experience
D)Actions undertaken by interested parties to influence the actions or outcomes of decisions made by others

Accepted Answer

The answer of The statement that best defines the term...

Question 20

Which of these is an era of accounting theory development during which the emphasis was on providing an overall framework to explain and develop accounting practice by using the empirical analysis method?
A)The general scientific period
B)The pre-scientific period
C)The practical approach period
D)The normative period

Accepted Answer

The general scientific period, also known as the positive period, spanned from the late 19th century to the mid-20th century. Its emphasis was on providing a scientific basis for accounting practice using empirical analysis methods. The framework and principles developed during this era still form the basis of modern accounting practice.

Quiz 1: Introduction

No systemic theory of accounting was devised from the time of Pacioli in the 15^th century until the opening of the 19^th century.

The period 1800 - 1955 has been labelled the empirical period in accounting development.

An example of a positive accounting theory is the bonus plan hypothesis.This predicts that managers who are not remunerated via bonus plans use profit-increasing accounting methods more than managers who are remunerated via bonus plan.

The current Australian conceptual framework consists of SAC 1,SAC 2,SAC 3,and SAC 4.

The statement that best defines what is meant by a theory is:

The main purpose of accounting theory is to prescribe accounting rules for practitioners.

Behavioural research,which is concerned with the broader sociological implications of accounting numbers and the associated actions of 'key players' as they react to accounting information,was first used in an accounting context in the 1980s.

The development of a conceptual framework has solved the problem of inconsistency in the application of accounting in practice.

While the accounting profession has sought to use accounting theories to unify accounting practice and make it more useful,academics use accounting theories to understand the role and impact of accounting information.Therefore,academic research on accounting is not useful for professional practice.

The normative period of accounting theory ended because empirical testing proved the theories developed during this period to be false.

Which of these would be an example of normative research (research based upon a normative theory) ?

During the normative period of accounting theory development,theorists were concerned with explaining and understanding current accounting practice.

An example of an inconsistency in accounting practice is for a company to depreciate some of its assets using the straight-line method and some using the reducing-balance method.

The rapid increase in demand for both management accounting and financial accounting information in the 1800s can be explained by:

Which of these characteristics is the least important for an accounting theory to be considered acceptable?

The ultimate objective of international accounting standards is to make all countries use the same standards so that there are no differences in reported information across international reporting boundaries.

As a result of accounting prescription being developed in a haphazard way there are follow-on inconsistencies in practice.

The statement that best defines the term 'empirical analysis' is:

Which of these is an era of accounting theory development during which the emphasis was on providing an overall framework to explain and develop accounting practice by using the empirical analysis method?

Quiz 1: Introduction

No systemic theory of accounting was devised from the time of Pacioli in the 15th century until the opening of the 19th century.

The period 1800 - 1955 has been labelled the empirical period in accounting development.

An example of a positive accounting theory is the bonus plan hypothesis.This predicts that managers who are not remunerated via bonus plans use profit-increasing accounting methods more than managers who are remunerated via bonus plan.

The current Australian conceptual framework consists of SAC 1,SAC 2,SAC 3,and SAC 4.

The statement that best defines what is meant by a theory is:

The main purpose of accounting theory is to prescribe accounting rules for practitioners.

Behavioural research,which is concerned with the broader sociological implications of accounting numbers and the associated actions of 'key players' as they react to accounting information,was first used in an accounting context in the 1980s.

The development of a conceptual framework has solved the problem of inconsistency in the application of accounting in practice.

While the accounting profession has sought to use accounting theories to unify accounting practice and make it more useful,academics use accounting theories to understand the role and impact of accounting information.Therefore,academic research on accounting is not useful for professional practice.

The normative period of accounting theory ended because empirical testing proved the theories developed during this period to be false.

Which of these would be an example of normative research (research based upon a normative theory) ?

During the normative period of accounting theory development,theorists were concerned with explaining and understanding current accounting practice.

An example of an inconsistency in accounting practice is for a company to depreciate some of its assets using the straight-line method and some using the reducing-balance method.

The rapid increase in demand for both management accounting and financial accounting information in the 1800s can be explained by:

Which of these characteristics is the least important for an accounting theory to be considered acceptable?

The ultimate objective of international accounting standards is to make all countries use the same standards so that there are no differences in reported information across international reporting boundaries.

As a result of accounting prescription being developed in a haphazard way there are follow-on inconsistencies in practice.

The statement that best defines the term 'empirical analysis' is:

Which of these is an era of accounting theory development during which the emphasis was on providing an overall framework to explain and develop accounting practice by using the empirical analysis method?

No systemic theory of accounting was devised from the time of Pacioli in the 15^th century until the opening of the 19^th century.