Question 1

Historical cost is more accountable because it is based on actual transactions.

Accepted Answer

A) True 
 B)False

Question 2

On the 1 June,Hazel Ltd commenced business with $10,000 cash and immediately purchased 2000 sprockets for $5 each.On the 30 June it sold all the units for $10.The current cost of the units on 30 June was $5.50 each.Under the physical capital perspective,what would be the capital maintenance adjustment for Hazel Ltd for June?

Accepted Answer

A) $1000 
B) $2000 
C) $9000 
D) $10,000 
A) $1000 
B) $2000 
C) $9000 
D) $10,000

Question 3

The statement that is not true in relation to auditing and accounting measurement systems is:

Accepted Answer

A) Auditors must contend with a mixed measurement model 
B) Auditors deal with some valuation issues by seeking expert opinions. 
C) Evidence suggests that expert valuations are more reliable than those made by management 
D) None of the above,i.e.all are true statements 
A) Auditors must contend with a mixed measurement model 
B) Auditors deal with some valuation issues by seeking expert opinions. 
C) Evidence suggests that expert valuations are more reliable than those made by management 
D) None of the above,i.e.all are true statements

Question 4

'However at the current (most recent)stage the IAS approach can be described as a mixed valuation approach with fair value accounting sometimes defined as current market entry cost prices but also historic cost,selling prices and discounted future cash flows' J.Godfrey,et el,'Accounting Theory',7th Ed.p.206.
Explain and discuss the above statement.

Accepted Answer

The statement suggests that the Internat

Question 5

One reason for the growth in importance of accounting information is the use of the corporate form for large organisations.

Accepted Answer

A) True 
 B)False

Question 6

The term 'current cash equivalent' refers to the asset's realisable price on the basis of an orderly liquidation.

Accepted Answer

A) True 
 B)False

Question 7

According to Whitman and Shubik,which of these is not the reason why investors are more interested in share market analysis compared to corporate analysis?

Accepted Answer

A) Investors develop a short-term view because the economics of share market investing is directed towards that end 
B) Investors deal with highly marketable securities and therefore move in and out of situations readily 
C) Investors have little knowledge about a company,its management,its policies and objectives 
D) Investors are concerned about what is really going on in a company's business 
A) Investors develop a short-term view because the economics of share market investing is directed towards that end 
B) Investors deal with highly marketable securities and therefore move in and out of situations readily 
C) Investors have little knowledge about a company,its management,its policies and objectives 
D) Investors are concerned about what is really going on in a company's business

Question 8

One of the criticisms of current cost accounting is that it does not recognise increases in the value of assets before the assets are sold.

Accepted Answer

A) True 
 B)False

Question 9

Explain and discuss the difference between 'value in use' and 'value in exchange' and the two different perspectives they give on the purpose of financial accounting.

Accepted Answer

Value in use and value in exchange are t

Question 10

Which of these is not a criticism of exit price accounting with respect to the profit concept?

Accepted Answer

A) Accounting must measure past events 
B) Exit pricing does not provide relevant data to match against revenues 
C) A firm can consider an asset to have value because of its use in business rather than its sale and use by another enterprise 
D) All of these are not a criticism of exit value accounting with respect to the profit concept 
A) Accounting must measure past events 
B) Exit pricing does not provide relevant data to match against revenues 
C) A firm can consider an asset to have value because of its use in business rather than its sale and use by another enterprise 
D) All of these are not a criticism of exit value accounting with respect to the profit concept

Question 11

Under the physical capital perspective what capital maintenance adjustment would be needed for the following situation? GHI Company purchased 300 units on 1 March for $25 each.On 31 March,GHI sold all the units for $30 each.On this date the current cost of each unit was $29.

Accepted Answer

A) $1500 
B) $1200 
C) $9000 
D) $300 
A) $1500 
B) $1200 
C) $9000 
D) $300

Question 12

Which of these is a defence of current cost accounting?

Accepted Answer

A) It is the most objective of the proposed accounting methods 
B) Relevant current events of the accounting period should be accounted for to maintain the usefulness of accounting information for decision-making 
C) It specifically recognises future technological changes in profit determination 
D) All of the above are defences 
A) It is the most objective of the proposed accounting methods 
B) Relevant current events of the accounting period should be accounted for to maintain the usefulness of accounting information for decision-making 
C) It specifically recognises future technological changes in profit determination 
D) All of the above are defences

Question 13

One of the reasons that MacNeal advocates the use of exit prices is the information gap created by the separation of ownership and control in companies.

Accepted Answer

A) True 
 B)False

Question 14

The FASB shows its supports for the financial capital view of current cost accounting in the Statement 33.

Accepted Answer

A) True 
 B)False

Question 15

The difference between share market analysis and corporate analysis is that share market analysis focuses on the underlying values of companies whereas corporate analysis mainly tries to ascertain what other investors are thinking.

Accepted Answer

A) True 
 B)False

Question 16

Under international accounting standards,the definition of fair value can vary substantially.

Accepted Answer

A) True 
 B)False

Question 17

On the 1 June,Hazel Ltd commenced business with $10,000 cash and immediately purchased 2000 sprockets for $5 each.On the 30 June it sold all the units for $10.The current cost of the units on 30 June was $5.50.
What would be the profit for Hazel Ltd under the physical capital perspective?

Accepted Answer

A) $9 000 
B) $10 
C) $11 
D) $12 
A) $9 000 
B) $10 
C) $11 
D) $12

Question 18

The alternative that is not an argument in favour of exit price accounting is:

Accepted Answer

A) Valuing all elements in the financial statements at their money equivalents provides one rule that can be applied consistently. 
B) The financial statements are allocation-free 
C) Rather than measuring past events the method measures those that might happen if a firm does something other than what was planned 
D) Exit price accounting involves references to real-world examples therefore it is more grounded in reality than historical cost accounting 
A) Valuing all elements in the financial statements at their money equivalents provides one rule that can be applied consistently. 
B) The financial statements are allocation-free 
C) Rather than measuring past events the method measures those that might happen if a firm does something other than what was planned 
D) Exit price accounting involves references to real-world examples therefore it is more grounded in reality than historical cost accounting

Question 19

Exit price accounting considers value in use as one of its key factors.

Accepted Answer

A) True 
 B)False

Question 20

Which of these is not a criticism of historical cost accounting?

Accepted Answer

A) It is not objective and is open to manipulation 
B) It has been used by business over many centuries 
C) Historical cost overstates profit in times of rising prices 
D) It relegates the balance sheet to a secondary position 
A) It is not objective and is open to manipulation 
B) It has been used by business over many centuries 
C) Historical cost overstates profit in times of rising prices 
D) It relegates the balance sheet to a secondary position

Historical cost is more accountable because it is based on actual transactions.

The statement that is not true in relation to auditing and accounting measurement systems is:

One reason for the growth in importance of accounting information is the use of the corporate form for large organisations.

The term 'current cash equivalent' refers to the asset's realisable price on the basis of an orderly liquidation.

According to Whitman and Shubik,which of these is not the reason why investors are more interested in share market analysis compared to corporate analysis?

One of the criticisms of current cost accounting is that it does not recognise increases in the value of assets before the assets are sold.

Explain and discuss the difference between 'value in use' and 'value in exchange' and the two different perspectives they give on the purpose of financial accounting.

Which of these is not a criticism of exit price accounting with respect to the profit concept?

Under the physical capital perspective what capital maintenance adjustment would be needed for the following situation? GHI Company purchased 300 units on 1 March for $25 each.On 31 March,GHI sold all the units for $30 each.On this date the current cost of each unit was $29.

Which of these is a defence of current cost accounting?

One of the reasons that MacNeal advocates the use of exit prices is the information gap created by the separation of ownership and control in companies.

The FASB shows its supports for the financial capital view of current cost accounting in the Statement 33.

The difference between share market analysis and corporate analysis is that share market analysis focuses on the underlying values of companies whereas corporate analysis mainly tries to ascertain what other investors are thinking.

Under international accounting standards,the definition of fair value can vary substantially.

On the 1 June,Hazel Ltd commenced business with $10,000 cash and immediately purchased 2000 sprockets for $5 each.On the 30 June it sold all the units for $10.The current cost of the units on 30 June was $5.50. What would be the profit for Hazel Ltd under the physical capital perspective?

The alternative that is not an argument in favour of exit price accounting is:

Exit price accounting considers value in use as one of its key factors.

Which of these is not a criticism of historical cost accounting?

Introduction

Accounting Theory Construction

Role of Theory in Accounting Regulation

Theory Underpinning Accounting Standards

Measurement

Assets

Liabilities and Owners Equity

Revenue

Expenses

Positive Theory of Accounting Policy and Disclosure

Capital Market Research

Behavioural Research

Emerging Issues in Accounting and Auditing

Filters

Exam 6: Accounting Measurement Systems

Historical cost is more accountable because it is based on actual transactions.

The statement that is not true in relation to auditing and accounting measurement systems is:

One reason for the growth in importance of accounting information is the use of the corporate form for large organisations.

The term 'current cash equivalent' refers to the asset's realisable price on the basis of an orderly liquidation.

According to Whitman and Shubik,which of these is not the reason why investors are more interested in share market analysis compared to corporate analysis?

One of the criticisms of current cost accounting is that it does not recognise increases in the value of assets before the assets are sold.

Explain and discuss the difference between 'value in use' and 'value in exchange' and the two different perspectives they give on the purpose of financial accounting.

Which of these is not a criticism of exit price accounting with respect to the profit concept?

Under the physical capital perspective what capital maintenance adjustment would be needed for the following situation? GHI Company purchased 300 units on 1 March for $25 each.On 31 March,GHI sold all the units for $30 each.On this date the current cost of each unit was $29.

Which of these is a defence of current cost accounting?

One of the reasons that MacNeal advocates the use of exit prices is the information gap created by the separation of ownership and control in companies.

The FASB shows its supports for the financial capital view of current cost accounting in the Statement 33.

The difference between share market analysis and corporate analysis is that share market analysis focuses on the underlying values of companies whereas corporate analysis mainly tries to ascertain what other investors are thinking.

Under international accounting standards,the definition of fair value can vary substantially.

On the 1 June,Hazel Ltd commenced business with $10,000 cash and immediately purchased 2000 sprockets for $5 each.On the 30 June it sold all the units for $10.The current cost of the units on 30 June was $5.50. What would be the profit for Hazel Ltd under the physical capital perspective?

The alternative that is not an argument in favour of exit price accounting is:

Exit price accounting considers value in use as one of its key factors.

Which of these is not a criticism of historical cost accounting?

Introduction

Accounting Theory Construction

Role of Theory in Accounting Regulation

Theory Underpinning Accounting Standards

Measurement

Assets

Liabilities and Owners Equity

Revenue

Expenses

Positive Theory of Accounting Policy and Disclosure

Capital Market Research

Behavioural Research

Emerging Issues in Accounting and Auditing

Filters