ACC341 - Topic 7

Question 1 of 5

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If historical cost profits are all distributed in dividends during times of rising inventory prices, this will lead to (assuming other things being equal):

Select one of the following:

  • A reduction in financial capital

  • An erosion of operating capacity

  • No effect on capital

  • None of the given options is correct.

Question 2 of 5

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Which of the following statements about holding gain (cost savings) in the CCA model is false?

Select one of the following:

  • Unrealised savings include gains (cost saving) from holding inventory that has increased in price, which have yet to be realised.

  • Realised savings relate to cost savings in inventory actually incurred, and gains (cost savings) relate to depreciation actually incurred.

  • Unrealised savings include gains (cost savings) from holding depreciable assets (with higher replacement costs) not yet realised through the process of depreciation.

  • All of the given options are correct.

Question 3 of 5

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Which of the following characteristics is not included in Continuously Contemporary Accounting (CoCoA), as proposed by Chambers?

Select one of the following:

  • It provides information about an entity's capacity to adapt to changing circumstances using its cash and cash equivalents.

  • All assets are valued in the Balance Sheet based on their exit (net selling) prices.

  • Profit is defined as the amount that can be distributed while maintaining operating capacity intact.

  • Unlike CCA, CoCoA does not make a distinction between realised and unrealised gains (cost savings).

Question 4 of 5

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Which of the following is not a perceived advantage in developing a conceptual framework project?

Select one of the following:

  • Standard-setters will be less accountable for their decisions.

  • Setting accounting standards will be more economical, despite the resources needed to develop the conceptual framework and standards.

  • It will result in a reduced number of accounting standards where issues are covered by the conceptual framework.

  • It will provide a defence and enhance the legitimacy of the accounting profession.

Question 5 of 5

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What does the political legitimacy argument, as outlined by Hines (1991), suggest?

Select one of the following:

  • The accounting profession consists of experts in technical knowledge of accounting and should therefore be given authority to regulate accounting.

  • The accounting profession used the development of the conceptual framework as a strategy to promote their self-regulation interests.

  • The conceptual framework provides the authority to resolve technical issues with authority and legitimacy.

  • As users are politically involved in developing the conceptual framework, the outcome has political legitimacy.

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ACC341 - Topic 7

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Quiz by , created about 2 years ago

Quiz on ACC341 - Topic 7, created by mentor on 15/09/2014.

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