ACC 563 Week 4 Quiz – Strayer NEW
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Week 4 Quiz 3: Chapters 4 and 5
Chapter 4
Multiple Choice
1. Which
of the following research approaches emphasizes going from the specific to the
general?
a. Deductive
b. Behavioral
c. Inductive
d. Pragmatic
Answer
2. Which
of the following research approaches is based on the concept of utility or
usefulness?
a. Deductive
b. Behavioral
c. Inductive
d. Pragmatic
Answer
3. Which
of the following research approaches is attributed to DR Scott?
a. Deductive
b. Ethical
c. Inductive
d. Pragmatic
Answer
4. Which
of the following outcomes of providing accounting information is an attempt to
identify individual securities that are mispriced by reviewing all available
financial information?
a. Agency
theory
b. Efficient
markets
c. Fundamental
analysis
d. Capital
asset pricing model
Answer
5. Which
of the following outcomes of providing accounting information is an attempt to
deal with both risks and returns?
a. Agency
theory
b. Efficient
markets
c. Fundamental
analysis
d. Capital
asset pricing model
Answer
6. Which
of the following outcomes of providing accounting information is based on the supply and demand model
a. Agency
theory
b. Efficient
markets
c. Fundamental
analysis
d. Capital
asset pricing model
Answer
7. The
efficient market hypothesis holds that that financial markets price assets at
their intrinsic worth, given all available information. Which of the following
forms of the efficient market hypothesis defines all available information as
knowledge of past security prices?
a. Weak
b. Semi-weak
c. Semi-strong
d. Strong
Answer
8. The
efficient market hypothesis holds that that financial markets price assets at
their intrinsic worth, given all available information. Which of the following
forms of the efficient market hypothesis defines all available information as
all publicly available information including past stock prices?
a. Weak
b. Semi-weak
c. Semi-strong
d. Strong
Answer
9. The
efficient market hypothesis holds that that financial markets price assets at
their intrinsic worth, given all available information. Which of the following
forms of the efficient market hypothesis defines all available information as
information, including security price trends, publicly available information,
and insider information?
a. Weak
b. Semi-weak
c. Semi-strong
d. Strong
Answer
10. What
theory on the outcomes of providing accounting information attempts to answer
the question: What is an individual’s expected benefit from a particular course
of action?
a.
Agency theory
b.
Efficient markets
c.
Fundamental analysis
d.
Capital asset pricing model
Answer
11. Which
of the following is not viewed as a cost to the principal in an agency
relationship?
a.
Monitoring expenditures by the principal
b.
Monitoring expenditures by the agent
c.
Bonding expenditures by the agent
d.
The residual loss
Answer
12. What theory on the outcomes of
providing accounting information attempts to assess an individual’s ability to
use information?
a. Agency
theory
b. Efficient
markets
c. Human information processing
d. Capital
asset pricing model
Answer
13. Which
of the following is not a conclusion that has been drawn from human information
processing research?
a. An
individual’s perception of information is quite selective. That is, since
individuals are capable of comprehending only a small part of their
environment, their anticipation of what they expect to perceive about a
particular situation will determine to a large extent what they do perceive.
b. Since
individuals make decisions on the basis of a small part of the total
information available, they do not have the capacity to make optimal decisions
c. Individuals
are able to process and integrate large amounts of information simultaneously
d. Since
individuals are incapable of integrating a great deal of information, they
process information in a sequential fashion.
Answer
14. What
theory on the outcomes of providing accounting information rejects the view
that knowledge of accounting is grounded in objective principles
a. Agency
theory
b. Critical
perspective
c. Fundamental
analysis
d. Capital
asset pricing model
Answer
Essay
1.
Briefly describe the following research
approaches:
2.
What is fundamental analysis and what is
its goal?
3.
Describe the efficient market hypothesis
and its three forms.
4.
Discuss the capital asset pricing model
including the concepts of unsystematic risk, systematic risk and beta.
5.
Discuss the difference between normative
and positive accounting theory.
6.
What is the basic assumption of agency
theory? Why is the relationship between
shareholders and management an agency relationship?
7.
What is the goal of human information
processing studies? What are the genera findings of these studies and what is
the implication for accounting?
8.
Discuss the concept of critical
perspectives research in accounting.
9.
Discuss the relationship among research,
education, and practice in accounting.
Example Test Questions
Chapter 5
Multiple Choice
1. One
concept of income suggests that income be measured by determining the net
change over time in the discounted present value of net cash flow expected to
be received by the firm. Under this concept of income, which of the following,
ignoring income taxes would not affect the amount of income for a period?
a. Providing
services to outsiders and investments of the funds received
b. Production
of goods or services not yet sold not yet delivered to customers or clients.
c. Windfall
gains and losses due to external causes.
d. The
method used to depreciate property, plant and equipment.
Answer
2.
The term revenue recognition conventionally refers to
a. The
process of identifying transactions to be recorded as revenue in an accounting
period.
b. The
process of measuring and relating revenue and expenses of an enterprise for an
accounting period.
c. The
earning process that gives rise to revenue realization.
d. The
process of identifying those transactions that result in an inflow of assets
from customers.
Answer
3.
In the transactions approach to income
determination, income is measured by subtracting the expenses resulting from
specific transactions during the period from revenues of the period also
resulting from transactions. Under a strict transactions approach to income
measurement, which of the following would not be considered a transaction?
a. Sale
of goods on account at 20 percent markup
b. Exchange
of inventory at a regular selling price for equipment
c. Adjustment
of inventory in lower of cost or market inventory valuations when market is
below cost.
d. Payment
of salaries
Answer
4. Conventionally
accountants measure income
a. By
applying a value added concept
b. By
using a transactions approach
c. As
a change in the value of owners’ equity
d. As
a change in the purchasing power of owners’ equity
Answer
5. Arid
Lands, Inc., is engaged in extensive exploration for water in the Caprock
Desert. If upon discovery of water the
corporation does not recognize any revenue from water sales until the sales
exceed the costs of exploration, the basis of revenue recognition being
employed is the
a. Production
basis
b. Cash
(or collection) basis
c. Sales
(or accrual) basis
d. Sunk
cost (or cost recovery) basis
Answer
6. The
installment method of recognizing revenue is not acceptable for financial
reporting if
a. The
collectability of the sales price is reasonably assured
b. The
installment period is less than 12 months
c. The
method is applied to only a portion of the total
d. Collection
expenses can be reasonably predicted
Answer
7. The
principal disadvantage of using the percentage of completion method of
recognizing revenue from long-term contracts is that it
a. Is
unacceptable for income tax purposes
b. May
require that intraperiod tax allocation procedures be used
c. Gives
results bases upon estimates that may be subject to considerable uncertainty
d. Is
likely to assign a small amount of revenue to a period during which much
revenue was actually earned
Answer
8. One
of the basic features of financing accounting is the
a. Direct
measurement of economic resources and obligations and changes in them in terms
of money and sociological and psychological impact
b. Direct
measurement of economic resources and obligations and changes in them in terms
of money
c. Direct
measurement of economic resources and obligations and changes in them in terms
of money and sociological impact
d. Direct
measurement of economic resources and obligations and changes in them in terms
of money and psychological impact
Answer
9. Uncertainty
and risks inherent in business situations should be adequately considered in
financial reporting. This statement is an example of the concept of
a. Conservatism
b. Completeness
c. Neutrality
d. Representational
faithfulness
Answer
10. Determining
periodic earnings and financial position depends on measuring economic
resources and obligations and changes in them as these changes occur. This
explanation pertains to
a. Disclosure
b. Accrual
accounting
c. Materiality
d. The
matching concept
Answer
11. Under
what condition is it proper to recognize revenues prior to the sale of the
merchandise?
a. When
the ultimate sale of the goods is at an assured sales price
b. When
the revenue is to be reported as an installment sale
c. When
the concept of internal consistency (of amounts of revenue) must be complied
with
d. When
management has a long-established policy to do so
Answer
12. Which
of the following is not a concept of income identified by Bedford?
a. Psychic
b. Real
c. Investment
d. Money
Answer
13. The
definition of the economic concept ofincomeis usually attributed towhich of the
following economists?
a. J.
R. Hicks
b. Paul
Samuelson
c. Ben
Bernanke
d. Adam
Smith
Answer
14. Which of the following is not an approach to
determining current value?
a. Replacement
cost
b. Thrift value
c. Selling
price
d. Discounting
present value
Answer
15. Each
asset—inventory, plant, equipment, and so on—would be valued based on the
selling price that would be realized if the firm chose to dispose of it is the
definition of which of the following
current value concepts?
a. Replacement
cost
b. Entry
price
c. Exit
value
d. Discounted present value
Answer
16. The
cost to replace assets with similar assets in a similar condition is the
definition of which of the following current value concepts?
a. Replacement
cost
b. Selling
price
c. Exit
value
d. Discounted present value
Answer
17. Income
is equal to the difference between the present value of the net assets at the
end of the period and their present value at the beginning of the period,
excluding the effects of investments by owners and distributions to owners is
the definition of which of the following
current value concepts?
a. Replacement
cost
b. Selling
price
c. Exit
value
d. Discounted present value
Answer
18. Which
of the following is not a criteria outlined in SEC Staff Accounting Bulletin
No. 101 for the recognition of revenue?
a. Persuasive
evidence of an arrangement exists.
b. Delivery
has not occurred.
c. The
vendor’s fee is fixed or determinable.
d. Collectability
is probable.
Answer
19. Which
of the following accounting theorists called of conservatism the most influential principle of valuation
in accounting?
a. Henry
Sweeney
b. Robert
Sprouse
c. Robert
Sterling
d. Edgar
Edwards
Answer
20. The
one-time overstatement of restructuring charges to reduce assets, which reduces
future expenses, is the definition of which of the following earnings
management techniques?
a. Taking
a bath
b. Creative
acquisition accounting
c. Creasing
“cookie jar” reserves
d. Abusing
the materiality concept
Answer
21. Deliberately recording errors or ignoring mistakes in
the financial statements under the assumption that their impact is not
significant, is the definition of which of the following earnings management
techniques?
a. Taking
a bath
b.Creative
acquisition accounting
c. Creasing
“cookie jar” reserves
d. Abusing
the materiality concept
Answer
22. Overstating sales returns or warranty costs in good
times and using these overstatements in bad times to reduce similar charges, is
the definition of which of the following earnings management techniques?
a. Taking
a bath
b. Creative
acquisition accounting
c. Creasing
“cookie jar” reserves
d. Abusing
the materiality concept
Answer
Essay
1.
List and three reasons why income
reporting is important to our economic society.
2. Discuss
the differences between the economic and accounting concepts of income.
3. Discuss
the three basic concepts of income as defined by Bedford.
4. Discuss
the difference between financial capital maintenance and physical capital
maintenance.
5. Define
the following terms:
a.
Entry price
b.
Exit price
c.
Discounted present value
6.
Discuss the four types of income defined
by Edwards and Bell.
7. What
conditions must be satisfied in order to recognize revenue according to Staff Accounting Bulletin (SAB) No. 101,
“Revenue Recognition in Financial Statements?
8.
Discuss how revenue might be recognized at
various points in a company’s production
- sale cycle.
9. Discuss
the matching concept.
10.
Define the following terms:
a. Holding
gains
b. Materiality
c. Conservatism
11. Discuss
the concepts of earnings quality and earnings management including:
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