1. Financial accounting refers to accounting information that is used by management for
decision- making purposes.
ANSWER: F
2. Accounting theory includes the basic rules, definitions, and principles that underlie the
drafting of accounting standards and how they are derived.
ANSWER: T
3. Accounting theory includes conceptual frameworks, accounting legislation, valuation
models, and hypotheses and theories.
ANSWER: T
4. Hypotheses and theories are based on an informal method of investigation.
ANSWER: F
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5. Replacement cost as a measure of asset value is generally more reliable than historical
cost.
ANSWER: F
6. Accounting theory is developed and refined by the process of accounting research.
ANSWER: T
7. Indirect measures are usually preferable to direct measures because they are less costly to
obtain.
ANSWER: F
8. Assessment measures are concerned with particular attributes of objects and are always
direct measurements.
ANSWER: F
9. When a direct assessment measure is used, there is always only one correct measure.
ANSWER: F
10. The simplest type of measuring system is the nominal scale.
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ANSWER: T
11. A chart of accounts is an example of an ordinal classification.
ANSWER: F
12. Numerals assigned in ordinal rankings indicate an order of preference where the degree
of preference among ranks is the same.
ANSWER: F
13. In a ratio scale, the zero point implies “nothingness,” or the absence of the quality being
measured.
ANSWER: T
14. Using ratio scale, measurement is possible in accounting.
ANSWER: T
15. Objectivity may be defined as the degree of consensus among measurers.
ANSWER: T
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16. Assessment measures are not concerned with particular attributes of objects.
ANSWER: F
17. Prediction measures are concerned with factors that may be indicative of future
conditions.
ANSWER: T
18. Timeliness and cost are pertinent to assessment measures but are not pertinent to
prediction measures.
ANSWER: F
19. All accounting measurements are of either the assessment or the prediction variety.
ANSWER: T
20. The need for information on a timely basis may conflict with cost constraints in some
situations.
ANSWER: T
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