MULTIPLE CHOICE
1.Which of the following specifically refers to the process of arriving at a pronouncement issued by the FASB or SEC?
a. Standard setting
b. Accounting research
c. Policy determination
d. Accounting valuation measurement
2.Which of the following is not true regarding accounting theory?
a. It includes concepts, valuation models, and hypotheses.
b. It is developed and refined by the process of accounting research.
c. It is concerned with improving financial accounting and statement presentation.
d. It is concerned with insuring that managers and investors are in agreement on how to improve financial statements. XXXXX
3.Which of the following refers to accounting information that is used by investors, creditors, and other outside parties for analyzing management performance and decision-making?
a. Managerial accounting
b. Financial accounting XXXXX
c. Income tax accounting
d. Institutional accounting
4.Computations and comparisons of accounting ratios is possible because:
a. The zero point in accounting implies “nothingness” in terms of dollar amount. XXXXX
b. Accounting measures are on an interval scale.
c. Assets and liabilities are listed in the order of liquidity in the balance sheet.
d. Accounting is a basic classification system.
5.Which of the following is a measure of predictive ability?
a. Objectivity
b. Bias XXXXX
c. Timeliness
d. Productivity
6.Which of the following has been the accepted valuation system for published financial statements throughout the financial history of the United States?
a. Historical cost XXXXX
b. Income tax valuation
c. Discounted cash flows
d. General price level
7.Which of the following valuation approaches has been defended as more suitable as a means for distributing income because it is not based on hypothetical opportunity cost figures?
a. Income tax valuation
b. Discounted cash flows
c. Historical cost XXXXX
d. Current value
8.Which of the following valuation approaches converts historical cost dollars by an index such as the Consumer Price Index?
a. Current value
b. Discounted cash flows
c. Replacement cost
d. General price-level adjustment XXXXX
9.Which of the following valuation methods is frequently referred to as a process of orderly liquidation?
a. Exit Valuation XXXXX
b. Entry Value
c. Replacement cost
d. Historical cost
10.Of the valuation systems discussed in your text, which one is purely theoretical, with virtually no operable practicability on a statement-wide basis?
a. Current value
b. Discounted cash flows XXXXX
c. General price-level adjustment
d. Historical cost