Question 1

In a ratio scale, the zero point implies "nothingness," or the absence of the quality being measured.

Accepted Answer

This is a characteristic of a ratio scale.

Question 2

Accounting theory includes conceptual frameworks, accounting legislation, valuation models, and hypotheses and theories.

Accepted Answer

Accounting theory includes all of the elements listed, including conceptual frameworks, accounting legislation, valuation models, and hypotheses and theories.

Question 3

Accounting theory is developed and refined by the process of accounting research.

Accepted Answer

Accounting theory is not static and changes over time. One of the ways in which it evolves is through accounting research, which aims to identify gaps in current knowledge and develop new insights and theories. Accounting research may involve empirical studies, theoretical analyses, and critical evaluations of existing theories, among other approaches. The findings of accounting research can inform the development of new accounting standards, practices, and policies, as well as the refinement of existing ones. Therefore, accounting theory is not a fixed set of principles but a dynamic and evolving field of inquiry that owes much to the contributions of accounting research.

Question 4

Prediction measures are concerned with factors that may be indicative of future conditions.

Accepted Answer

Prediction measures are designed to identify factors that may be indicative of future conditions or outcomes. These measures can help organizations anticipate potential risks, opportunities, or changes in their operating environment.

Question 5

Objectivity may be defined as the degree of consensus among measurers.

Accepted Answer

Objectivity is based on the level of agreement or consensus among different measurers or observers. It is an important aspect of research and ensures that findings are reliable and credible.

Question 6

Financial accounting refers to accounting information that is used by management for decision-making purposes.

Accepted Answer

Financial accounting provides financial information that is used by external stakeholders, such as investors, creditors, and regulators, rather than management for decision-making purposes. Management accounting, on the other hand, provides accounting information that is used by management for decision-making purposes.

Question 7

The simplest type of measuring system is the nominal scale.

Accepted Answer

The nominal scale is the simplest type of measuring system where data is categorized into distinct categories or labels without any order or numerical value assigned to them.

Question 8

Timeliness and cost are pertinent to assessment measures but are not pertinent to prediction measures.

Accepted Answer

Timeliness and cost can be relevant to both assessment and prediction measures. For example, in predicting a project's completion date, timeliness and cost may be important factors to consider.

Question 9

Using ratio scale measurement is possible in accounting.

Accepted Answer

Ratio scale measurement is possible in accounting, where numerical values represent actual ratios and allow for meaningful comparisons between values. For example, the ratio of a company's assets to its liabilities is a ratio measurement that provides valuable information for financial analysis.

Question 10

Replacement cost as a measure of asset value is generally more reliable than historical cost.

Accepted Answer

Replacement cost can fluctuate due to market conditions and may not reflect the actual amount paid for an asset, whereas historical cost is based on the actual transaction value, providing a more reliable and verifiable measure of asset value.

Question 11

A chart of accounts is an example of an ordinal classification.

Accepted Answer

A chart of accounts is an example of a nominal classification system, as it organizes financial transactions into named categories without implying a hierarchy or order among them.

Question 12

Assessment measures are concerned with particular attributes of objects and are always direct measurements.

Accepted Answer

Assessment measures can be direct or indirect measurements and are concerned with a variety of attributes, not just specific ones.

Question 13

Indirect measures are usually preferable to direct measures because they are less costly to obtain.

Accepted Answer

Indirect measures often require more time and resources to collect and analyze compared to direct measures. Direct measures are usually considered more accurate but may be costlier to obtain.

Question 14

Hypotheses and theories are based on an informal method of investigation.

Accepted Answer

Hypotheses and theories are not based on an informal method of investigation. They are developed through a formal and rigorous process of testing, analyzing data, and making conclusions based on evidence.

Question 15

All accounting measurements are of either the assessment or the prediction variety.

Accepted Answer

This statement is true. All accounting measurements are either assessing past events (assessment) or predicting future events (prediction).

Question 16

Assessment measures are not concerned with particular attributes of objects.

Accepted Answer

Assessment measures are designed to evaluate or measure specific attributes or characteristics of objects, whether they are people, products, or processes.

Question 17

Accounting theory includes the basic rules, definitions, and principles that underlie the drafting of accounting standards and how they are derived.

Accepted Answer

Accounting theory provides the foundation for the development of accounting standards and is used to guide the interpretation and application of those standards. It includes the underlying principles, concepts, and assumptions upon which financial reporting is based.

Question 18

The need for information on a timely basis may conflict with cost constraints in some situations.

Accepted Answer

In some situations, obtaining information on a timely basis may require higher costs, which can be a conflict with the organization's cost constraints.

Question 19

Numerals assigned in ordinal rankings indicate an order of preference where the degree of preference among ranks is the same.

Accepted Answer

Numerals assigned in ordinal rankings indicate an order of preference where the degree of preference among ranks is NOT always the same. For example, being in first place may indicate a higher degree of preference or importance than being in fifth place.

Question 20

When a direct assessment measure is used, there is always only one correct measure.

Accepted Answer

Direct assessment measures can vary and include multiple methods such as exams, portfolios, or performance tasks, depending on the learning outcomes being assessed.

Quiz 1: An Introduction to Accounting Theory