Test Bank, Chapter 2 Page 1

Financial Accounting Theory & Analysis: Text and Cases

Test Bank, Chapter 2 Page 1 Accounting Theory and Analysis 11 th Edition

Test Bank

By

Richard G. Schroeder University of North Carolina at Charlotte

Myrtle W. Clark University of Kentucky

Jack M. Cathey University of North Carolina at Charlotte

Financial Accounting Theory and Analysis Text and Cases 11th Edition Schroeder Test Bank Visit TestBankDeal.com to get complete for all chapters

Financial Accounting Theory & Analysis: Text and Cases

Test Bank, Chapter 2 Page 2 Chapter 2

Multiple Choice

• Which early accounting theorist was among the first to express the view that all changes

in the value of assets and liabilities should be reflected in the financial statements?

• A. C. Littleton
• John Canning
• William Paton
• DR Scott

Answer c

• Which of the following economists most influenced the views of DR Scott?
• Thorstein Veblen
• John Hicks
• Karl Marx
• John Smith

Answer a

• Which of the following is not one of DR Scott’s hierarchy of accounting postulates and

principles?

• Orientation postulate.
• The principles of truth and fairness.
• The materiality principle
• The principles of adaptability and consistency.

Answer c

• Which of the following organizations published the monograph titled A Tentative

Statement of Accounting Principles Affecting Annual Corporate Reports

• SEC
• AAA
• AIA
• NAA

Answer b

• Which of the following organizations published the monograph titled A Statement of

Accounting Principles?

• SEC
• AAA
• AIA
• NAA

Answer c

Financial Accounting Theory & Analysis: Text and Cases

Test Bank, Chapter 2 Page 3

• Who was the author of Accounting Research Study No. 1, The Basic Postulates of

Accounting?

• Robert Sprouse
• Maurice Moonitz
• Alvin Jennings
• Thomas Hatfield

Answer b

• Which of the following is not an approach to accounting theory As categorized by

Statement on Accounting Theory and Theory Acceptance?

• Classical,
• Neoclassical
• Decision usefulness
• Information economics.

Answer b

• What is the objective of financial reporting?
• Provide information that is useful to management in making decisions.
• Provide information that clearly portrays nonfinancial transactions.
• Provide information about the reporting entity that is useful to present and potential

equity investors, lenders, and other creditors.

• Provide information that excludes claims to the resources.

Answer c

• Under Statement of Financial Accounting Concepts No. 8, confirmatory value is an

ingredient of the primary quality of Relevance Faithful representation

• No No
• No Yes
• Yes Yes
• Yes No

Answer d

• Which of the following is considered a constraint by Statement of Financial Accounting

Concepts No. 8?

• Cost
• Conservatism
• Timeliness
• Verifiability

Answer a

• Under Statement of Financial Accounting Concepts No. 8, which of the following is an

ingredient of the primary quality of relevance?

• Neutrality

Financial Accounting Theory & Analysis: Text and Cases

Test Bank, Chapter 2 Page 4

• Completeness
• Understandability
• Verifiability

Answer b

• Under Statement of Financial Accounting Concepts No. 8, which of the following is an

ingredient of the primary quality of faithful representation?

• Understandability
• Verifiability
• Predictive value
• Materiality

Answer b

• Under Statement of Financial Accounting Concepts No. 8, the ability through consensus

of measures to ensure that information represents what it purports to represent is an example of the concept of

• Relevance
• Verifiability
• Faithful representation
• Feedback value

Answer c

• Under Statement of Financial Accounting Concepts No. 8, which of the following relates

to both relevance and reliability?

• Timeliness
• Materiality
• Predictive value
• Neutrality

Answer a

• Under Statement of Financial Accounting Concepts No. 8, which of the following is not

a qualitative characteristic associated with faithful representation?

• Completeness
• Free from error
• Neutrality
• Predictive value

Answer d

• What is meant by comparability when discussing financial accounting information?
• Information has predictive or confirmatory value.
• Information is reasonably free from error.
• Information that is measured and reported in a similar fashion across companies.
• Information is timely.

Answer c