Question 1

Which type of accounting principle is concerned with the comparability of financial statements of different firms?

Accepted Answer

A)   Input-oriented principles
B)   Output-oriented principles
C)   Constraining principles
D)   Both a and c

Question 2

Which of the following is not true regarding the time period postulate?

Accepted Answer

A)   It results in an artificial segmentation of a continuing process.
B)   It has led to accrual accounting.
C)   It allows different accounting methods to be followed in interim periods.
D)   It allows interim reports to include estimates of annual amounts.

Question 3

Which of the following are defined in the text as general approaches utilized in the recognition and measurement of accounting events?

Accepted Answer

A)   Concepts
B)   Principles
C)   Postulates
D)   Axioms

Question 4

When we view the business entity in the context of accounting, as well as in its legal form, it is clear that:

Accepted Answer

A)   The entity is separate from its owners.
B)   The entity is identical to its owners.
C)   The pooling method should be used for business combinations.
D)   Entities should be considered as one unit as a result of one controlling the other(s) .

Question 5

Discuss the matching principle and how it applies to recognizing expenses. Why is the matching principle currently under attack?

Accepted Answer

Expenses are costs that expire as a resu...

Question 6

Which of the following postulates is violated when liquidation values for assets and equities are reported under ordinary circumstances?

Accepted Answer

A)   Entities
B)   Time period
C)   Consistency
D)   Going concern

Question 7

Which of the following is not a true statement?

Accepted Answer

A)   A principle is a statement of a true and generalized nature containing referents to the real world.
B)   If a principle could be empirically tested and proven true, it would be capable of becoming a law.
C)   The truth of a law or principle means that is should not be replaced by a newer system.
D)   Principles are general statements that influence the way we view phenomena and the way we think about problems.

Question 8

Which of the following is an accurate overall label for the terms postulates and principles?

Accepted Answer

A)   Constraints
B)   Concepts
C)   Axioms
D)   Conventions

Question 9

Disclosure will become less important in the future because of market efficiency.

Accepted Answer

A) True 
 B)False

Question 10

When the business is viewed in the context of accounting as well as in its legal form, it is clear that the entity is identical to its owners.

Accepted Answer

A) True 
 B)False

Question 11

The key group in Moonitz's set of postulates consists of postulates stemming from accounting itself.

Accepted Answer

A) True 
 B)False

Question 12

Which type of accounting principle is concerned with general approaches or rules for preparing financial statements and their content?

Accepted Answer

A)   Input-oriented principles
B)   Output-oriented principles
C)   Constraining principles
D)   Both a and c

Question 13

Which of the following is not a reason why ARS 1 and ARS 3 fell short of the goal of obtaining a framework for APB accounting opinions?

Accepted Answer

A)   The authors refused to abandon historical cost.
B)   The postulates were not complete and therefore could not exclude all value systems other than the one prescribed in the principles.
C)   At least one of the principles was not derived from any of the postulates.
D)   The question of whether valuations of various assets were additive became an issue.

Question 14

Under which of the following theories would the accounting equation be Total Assets = Total Equities (including liabilities) ?

Accepted Answer

A)   Residual equity theory
B)   Proprietary theory
C)   Entity theory
D)   Commander theory

Question 15

One reason ARS 1 and ARS 3 fell short of the goal of obtaining a framework for APB accounting opinions is that the accounting profession refused to abandon historical cost.

Accepted Answer

A) True 
 B)False

Question 16

Which of the following are defined in the text as the result of the process of identifying, classifying, and interpreting various phenomena or precepts?

Accepted Answer

A)   Concepts
B)   Principles
C)   Postulates
D)   Axioms

Question 17

Output-oriented principles are broad rules that guide the accounting function.

Accepted Answer

A) True 
 B)False

Question 18

The APB was the first to successfully derive an underlying framework of postulates and principles.

Accepted Answer

A) True 
 B)False

Question 19

A principle contains elements observable by empirical techniques.

Accepted Answer

A) True 
 B)False

Question 20

Recognition and Matching are examples of:

Accepted Answer

A)   Input-oriented principles
B)   Output-oriented principles
C)   Constraining principles
D)   Both a and c

Exam 5: Postulates, Principles, and Concepts

A principle contains elements observable by empirical techniques.

Correct AnswerverifiedShow Answer

Output-oriented principles are broad rules that guide the accounting function.

Correct AnswerverifiedShow Answer

Which of the following postulates is violated when liquidation values for assets and equities are reported under ordinary circumstances?

Correct AnswerverifiedShow Answer

Which of the following is an accurate overall label for the terms postulates and principles?

Correct AnswerverifiedShow Answer

Which of the following is not a reason why ARS 1 and ARS 3 fell short of the goal of obtaining a framework for APB accounting opinions?

Correct AnswerverifiedShow Answer

Recognition and Matching are examples of:

Correct AnswerverifiedShow Answer

Which type of accounting principle is concerned with the comparability of financial statements of different firms?

Correct AnswerverifiedShow Answer

Which of the following is not true regarding the time period postulate?

Correct AnswerverifiedShow Answer

The APB was the first to successfully derive an underlying framework of postulates and principles.

Correct AnswerverifiedShow Answer

Under which of the following theories would the accounting equation be Total Assets = Total Equities (including liabilities) ?

Correct AnswerverifiedShow Answer

Discuss the matching principle and how it applies to recognizing expenses. Why is the matching principle currently under attack?

Correct AnswerverifiedExpenses are costs that expire as a resu...View AnswerShow Answer

Which of the following are defined in the text as general approaches utilized in the recognition and measurement of accounting events?

Correct AnswerverifiedShow Answer

Disclosure will become less important in the future because of market efficiency.

Correct AnswerverifiedShow Answer

One reason ARS 1 and ARS 3 fell short of the goal of obtaining a framework for APB accounting opinions is that the accounting profession refused to abandon historical cost.

Correct AnswerverifiedShow Answer

When the business is viewed in the context of accounting as well as in its legal form, it is clear that the entity is identical to its owners.

Correct AnswerverifiedShow Answer

The key group in Moonitz's set of postulates consists of postulates stemming from accounting itself.

Correct AnswerverifiedShow Answer

Which of the following are defined in the text as the result of the process of identifying, classifying, and interpreting various phenomena or precepts?

Correct AnswerverifiedShow Answer

Which of the following is not a true statement?

Correct AnswerverifiedShow Answer

When we view the business entity in the context of accounting, as well as in its legal form, it is clear that:

Correct AnswerverifiedShow Answer

Which type of accounting principle is concerned with general approaches or rules for preparing financial statements and their content?

Correct AnswerverifiedShow Answer

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Expenses are costs that expire as a resu...
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