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Contemporary Issues in Accounting Exam Preparation Guide
Course Introduction
This course examines current challenges and emerging trends in the field of accounting, focusing on the impact of globalization, technological advancements, regulatory changes, and evolving ethical standards. Students will explore topics such as corporate governance, sustainability reporting, international financial reporting standards (IFRS), accounting for digital assets, and the role of accountants in addressing fraud and ethical dilemmas. Through case studies and analysis of real-world scenarios, the course aims to develop critical thinking skills and prepare students to adapt to the dynamic landscape of the accounting profession.
Recommended Textbook
Financial Accounting Theory 3rd Edition by Craig Deegan
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12 Chapters
300 Verified Questions
300 Flashcards
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Page 2
Chapter 1: Introduction to Financial Accounting Theory
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24 Verified Questions
24 Flashcards
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Sample Questions
Q1) Which of the following is not assumed in Positive Accounting Theory?
A) Individuals (including managers) are economically rational in their behaviour
B) Individuals (including managers) are primarily motivated by self-interest
C) The natural objective of managers is to maximise the wealth of the firm
D) Managers are not indifferent in selecting accounting methods to use
Answer: C
Q2) The failure of a particular study to support a theory:
A) Provides the basis for rejecting the theory as useless or insignificant
B) Means that the particular study must have flaws in its design or execution in specifying and collecting the data
C) Threatens the theory, if repeated or more refined studies fail to support it with empirical evidence
D) Means that the hypothesis was too broad, and did not specify the particular circumstances and conditions in enough detail
Answer: C
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3
Chapter 2: The Financial Reporting Environment
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24 Flashcards
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Sample Questions
Q1) Accounting theories should be
A) Inductive
B) Deductive
C) Descriptive
D) None of the given options is correct
Answer: D
Q2) What theoretical perspective suggests that where firms are able to choose accounting methods,they will choose those that best reflect their economic performance?
A) Opportunistic perspective
B) Efficiency perspective
C) Creative accounting perspective
D) Economic interest perspective
Answer: B
Q3) Financial accounting leads to the generation of:
A) Reports to meet the specific information needs of users
B) Monthly financial reports for management
C) Special purpose financial reports
D) General purpose financial reports
Answer: D
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Chapter 3: The Regulation of Financial Accounting
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25 Verified Questions
25 Flashcards
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Sample Questions
Q1) Which of the following assumptions of the market for corporate takeovers can be criticised for being unrealistic in practice?
A) An under-performing firm will be taken over by another firm, which will then subsequently replace the current management team
B) Managers will be motivated to maximise the firm's value to minimise the likelihood that outsiders could seize control
C) Management will know the marginal cost and benefit involved in producing the optimum amount of information required to minimise the firm's cost of capital
D) All of the given options are correct
Answer: C
Q2) A pro-regulatory perspective would argue that accounting information will be provided.
A) Freely, to protect the public interest
B) According to the forces of demand and supply
C) To reduce the costs of capital
D) To reduce uncertainty about the firm
Answer: A
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Page 5
Chapter 4: International Accounting
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28 Flashcards
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Sample Questions
Q1) The type of business ownership and financing system,and the taxation system,influence the nature of accounting practice in different countries.Which of the following describes the institutional influence more conducive to the increasing scale of globalised business and development of international accounting standards?
A) Outsider systems, where finance is mainly provided by external shareholders, and where the tax system is separate form the accounting system
B) Insider systems, where finance is mainly provided by family owners, banks and government, and the tax system dominates the accounting system
C) Outsider systems, where finance is mainly provided by family owners, banks and government, and the tax system is separate from the accounting system
D) Insider systems, where finance is mainly provided by external shareholders, and where the tax system dominates the accounting system
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6
Chapter 5: Normative Theories of Accountingthe Case of Accounting for Changing Prices
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24 Flashcards
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Sample Questions
Q1) Which of the following measurement models of accounting equate with the perspectives of maintaining the purchasing power of capital intact?
A) General price-level adjustment accounting
B) Current cost accounting
C) Continuously contemporary accounting
D) None of the given options is correct
Q2) How would the deprival value of an asset be determined?
A) It is the present value of the future cash flows to be generated by the asset, except where the current replacement cost or net selling price is less than that value
B) It is the net selling price except where the value to the business (present value) is less, or the current replacement cost greater
C) It is the current replacement cost where the present value is less than the current replacement cost and greater than the net selling price
D) It is the value to the business of the asset (present value) within the bounds that this value is not less than the net selling price or greater than its current replacement cost
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Chapter 6: Normative Theories of Accountingthe Case of Conceptual Framework Projects
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28 Flashcards
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Sample Questions
Q1) The objective of general purpose financial reporting is stated in most conceptual frameworks as providing decision-useful information to users of financial reports.Which of the following are not regarded as legitimate users of financial reports according to the IASB Framework?
A) Users without some proficiency in financial accounting
B) Recipients of goods and services
C) Special interest groups in the general public
D) All of the given options are correct
Q2) Which of the following is not a characteristic of a liability,according to the IASB Framework?
A) A future deposition or transfer of economic benefits to others
B) A past transaction or event to have created the obligation
C) There must be a legal obligation
D) None of the given options are correct
Q3) Which of the following is a characteristic of reliability?
A) It influences economic decisions
B) It represents faithfully what it purports to represent
C) It provides predictive value and feedback to confirm or correct earlier expectations
D) None of the given options are correct
Page 8
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Chapter 7: Positive Accounting Theory
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Sample Questions
Q1) Agency theory suggests that government regulation is:
A) Necessary, because principals know that agents may not act in their interests
B) Necessary, because agents know that principals may not act in their interests
C) Unnecessary, because principals know that agents may not act in their interests
D) Unnecessary, because agents know that principals may not act in their interests
Q2) The 'debt/equity hypothesis' of Positive Accounting Theory predicts that:
A) The higher the firm's debt/equity ratio, the more likely managers are to use accounting methods that lower income
B) The lower the firm's debt/equity ratio, the more likely managers are to use accounting methods that increase income
C) The higher the firm's debt/equity ratio, the more likely managers are to use accounting methods that increase income
D) None of the given options is correct
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Chapter 8: Unregulated Corporate Reporting Decisions:
Considerations of Systems-Oriented Theories
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Sample Questions
Q1) In relation to Political Economy Theory,which of the following statements is false?
A) Political Economy Theory views society, politics and economics as inseparable
B) Political Economy Theory is derived from Positive Accounting Theory
C) Legitimacy Theory and Stakeholder Theory are derived from Political Economy Theory
D) Political Economy Theory can be divided into 'classical' and 'bourgeois' political economy theories
Q2) According to Legitimacy Theory,the annual report is:
A) A means to assist users in legitimately allocating scarce resources
B) A tool to legitimise the ongoing operations of the organisation
C) A legitimate account of the activities of the organisation for the period
D) All of the given options are correct
Q3) An organisation disclosing social and environmental information in response to shareholder demands is an example of:
A) Mimetic isomorphism
B) Coercive isomorphism
C) Normative isomorphism
D) None of the given options is correct
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Page 10
Chapter 9: Extended Systems of Accountingthe
Incorporation of Social and Environmental Factors Within External Reporting
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Sample Questions
Q1) The main contribution of frameworks such as the Global Reporting Initiative is that they enable:
A) Comparison of social and environmental performance between companies
B) Aggregation of social and environmental performance to a single 'sustainability' number
C) Improved social and environmental performance
D) None of the given options is correct
Q2) A 'social audit' is when an organisation:
A) Obtains independent verification on its social disclosures
B) Obtains independent verification on its social and environmental disclosures
C) Assesses its performance in relation to stakeholder expectations of social performance
D) Assesses its performance in relation to stakeholder expectations of social and environmental performance
Q3) A 'social audit' may assist an organisation to:
A) Identify areas where stakeholders believe it is deficient
B) Avoid losing its 'licence to operate'
C) Enhance its reputation
D) All of the given options are correct
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Chapter 10: Reactions of Capital Markets to Financial Reporting
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Sample Questions
Q1) The book value is generally less than the market value of a firm because:
A) Capital markets are not strong-form efficient
B) Certain intangibles may not meet the asset recognition criteria
C) Assets may be overvalued by unethical managers
D) The market values of assets are difficult to measure
Q2) Which of the following statements is true?
A) Capital markets research analyses individual responses to financial reporting, while behavioural research assesses the aggregate effect of financial reporting
B) Capital markets research assesses the aggregate effect of financial reporting, while behavioural research analyses individual responses to financial reporting
C) Both capital markets and behavioural research assess the aggregate effect of financial reporting
D) Both capital markets and behavioural research analyse individual responses to financial reporting
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Chapter 11: Reactions of Individuals to Financial Reporting:
An Examination of Behavioural Research
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Sample Questions
Q1) Behavioural research suggests the presentation of financial information in pictorial formats:
A) Makes little difference to decision-making
B) Can improve decision-making
C) Is perceived to improve decision-making, but does not actually improve decision-making
D) None of the given options is correct
Q2) Some of the issues that have been considered in behavioural research include assessing the impact of:
A) The presentation of cues
B) The perceived rewards of cues
C) The scaling of cues
D) All of the given options are correct
Q3) Limitations of protocol analysis do not include difficulties with
A) Ensuring that verbal protocols are complete
B) Ensuring that verbal protocols match cognitive processes
C) Developing theory from verbal protocols
D) Coding verbal protocols
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Chapter 12: Critical Perspectives of Accounting
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Sample Questions
Q1) Critical researchers believe that accounting information:
A) Is neutral and unbiased
B) Benefits neither the rich nor poor
C) Is used by the elite to maintain their power
D) Challenges existing social orders
Q2) Critical researchers accuse financial accounting of:
A) Being open to manipulation by self-interested managers
B) Reinforcing unequal distributions of wealth and power
C) Being irrelevant to management decision-making
D) Poorly predicting stock prices
Q3) Which theoretical perspectives have been utilised by critical researchers?
A) Marxism
B) Deep ecology
C) Radical feminism
D) All of the given options are correct
Q4) Praxis means that
A) Theory influences practice
B) Practice influences theory
C) Theory influences practice, while practice influences theory
D) Theory does not influence practice, and practice does not influence theory
Page 14
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