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Chapter 2—ACCOUNTING THEORY AND ACCOUNTING RESEARCH
Accounting Theory: 9
th edition Page 1 of 12
TRUE/FALSE
- The use of research in accounting results in the field being referred to as an academic discipline.
ANSWER: T
- The scientific method refers to the formal procedures used to derive the laws and principles that
govern scientific disciplines, such as physics and chemistry, and is therefore not used in the published research on accounting.
ANSWER: F
- An important segment of accounting theory is derived from the research process.
ANSWER: T
- Deductive reasoning analyzes empirical data to make inferences about a population.
ANSWER: F
- Hypotheses are conclusions derived from the research process.
ANSWER: F
- General deductive reasoning is extremely important in accounting theory and policy-making.
ANSWER: T
- Analytical/deductive research methods are commonly used in accounting research.
ANSWER: F
- Positive accounting research attempts to explain behavioral relationships in accounting.
ANSWER: T
- Positive accounting research attempts to describe “what is” and determine how things should be.
ANSWER: F
- Positive accounting research attempts to be value-free, while normative accounting research is
value judgment oriented.
ANSWER: T
- Only a few examples of inductively derived theories are present in accounting literature.
ANSWER: F
Accounting Theory Conceptual Issues in a Political and Economic Environment 9th Edition Wolk Test Bank Visit TestBankDeal.com to get complete for all chapters
Chapter 2—ACCOUNTING THEORY AND ACCOUNTING RESEARCH
Accounting Theory: 9
th edition Page 2 of 12
- Normative theories contain at least one premise stating how things should be.
ANSWER: T
- A premise stating that accounting reports should be based on historical costs would indicate a
normative approach.
ANSWER: T
- Inductive approaches to accounting theory usually attempt to be descriptive.
ANSWER: T
- An important difference between deductive and inductive research is that inductive research is
sometimes global in content, whereas deductive research is usually particularistic.
ANSWER: F
- One of the purposes of positive research is to satisfy information demand by managers, auditors,
creditors, and standard setters.
ANSWER: T
- Because deductive research is grounded in real-world phenomena, it can realistically focus on
only a small part of the relevant environment.
ANSWER: F
- Deductive and inductive research are competing approaches and may not be used together.
ANSWER: F
- Inductive research in accounting can help to shed light on relationships and phenomena existing
in the business environment.
ANSWER: T
- Inductive research can be useful in the accounting policy-making process in which deductive
reasoning helps to determine rules that are to be prescribed.
ANSWER: T
- To be useful, inductive research must be kept value-free.
ANSWER: F
- The decision-model approach to accounting research is normative.
ANSWER: T
Chapter 2—ACCOUNTING THEORY AND ACCOUNTING RESEARCH
Accounting Theory: 9
th edition Page 3 of 12
- Accounting research of two generations ago was purely normative.
ANSWER: T
- The decision-model approach to accounting research seeks to determine what information users
of accounting information want.
ANSWER: F
- The normative nature of the decision-model approach has led to criticism that this method is non-
scientific.
ANSWER: T
- Empirical research shows that prices of publicly traded securities react slowly and in an erratic
manner to new information.
ANSWER: F
- The efficient-markets hypothesis states that the return of a security is based on its risk.
ANSWER: T
- Because of the efficient-markets hypothesis, the impetus for increased disclosure with less
concern for choice among accounting alternatives has grown stronger.
ANSWER: T
- Much of the accounting research in the behavioral area uses laboratory subjects in carefully
controlled experimental situations.
ANSWER: T
- An argument against using students as subjects in behavioral research experiments is that they are
not representative of the broad population of accounting information users.
ANSWER: T
- Agency theory studies are always inductive.
ANSWER: F
- One hypothesis of agency theory is that management attempts to maximize its own welfare by
minimizing the various agency costs arising from monitoring and contracting.
ANSWER: T
- Agency theory holds that management always tries to maximize the value of the firm.
ANSWER: F
Chapter 2—ACCOUNTING THEORY AND ACCOUNTING RESEARCH
Accounting Theory: 9
th edition Page 4 of 12
- Information economics research is usually inductive in nature.
ANSWER: F
- Information economics has relatively recently included agency theory assumptions in its analysis.
ANSWER: T
- Critical accounting discourages active social roles for accountants.
ANSWER: F
- Critical accounting research assumes a sharp separation between the researcher and his or her
field of investigation.
ANSWER: F
- Of the research methods discussed in the text, the critical accounting approach is the closest to
the standard-setting function.
ANSWER: F
- Currently accepted alternative depreciation methods illustrate that accounting is closer to an art
than a science.
ANSWER: T
- Because accounting is not very much concerned with the human element, we can expect it to be
more precise in its measurement and predictions than are the natural sciences.
ANSWER: F
MULTIPLE CHOICE
- Which of the following examines or tests data, usually from a sample of a population, to make
- Deductive reasoning
- Inductive reasoning
- Subjective reasoning
- Objective reasoning
inferences about the population?
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