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BE-3131AccountingTheory Candidate9518
1/22
BE-313Emnekode
MultiplechoiceVurderingsform
19.12.201609:00Starttid
19.12.201612:00Sluttid
12.01.201701:00Sensurfrist
05.09.201812:31PDFopprettet
DigitalEksamenOpprettetav
KANDIDAT
9518
PRØVE
BE-3131AccountingTheory
BE-3131AccountingTheory Candidate9518
2/22
1 BE-313høsten2016Coursecode:BE-313Coursename:AccountingTheoryDate:December19thDuration:3hoursResourcesallowed:Itemstouse:EnglishtoNorwegianand/orNorwegiantoEnglishdictionary-----------------------------Sometimesprofessorsaskforexamanswersthatcanbeusedforteachingpurposes,butinorderforthistotakeplace,theuniversityneedsyourconsent.DoyougranttheUniversityofAgderpermissiontouseyourexamanswerforteachingpurposes?
Yes
No
Riktig.0av0poeng.
2 Ch1Themainpurposeofaccountingtheoryistoprescribeaccountingrulesforaccountants.Selectanalternative:
True
False
Riktig.1av1poeng.
3 Ch1Selectthepairofperiodsofaccountingtheoreticaldevelopmentbasedonasimilarapproach:Selectanalternative:
Thegeneralscientificandthepositiveperiods
Thenormativeandpositiveperiods
Thegeneralscientificandthenormativeperiods
Noneoftheabove
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4 Ch1Thenormativeperiodofaccountingtheoryendedbecauseempiricaltestingprovedthetheoriesdevelopedduring
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thisperiodtobefalse.Selectanalternative:
True
False
Riktig.1av1poeng.
5 Ch1Whichoftheseistheleastimportantforanaccountingtheorytobeconsideredacceptable?Selectanalternative:
Howacceptabletheimplicationsoftheaccountingtheory
Howprescriptivetheaccountingtheoryis
Howwellthetheoryexplainsandpredictsreality
Howwelltheaccountingtheoryhasbeenconstructed
Riktig.1av1poeng.
6 Ch1Fromthepositivetheoryperspective,'debthypothesis'predictsthatlargerthefirm'sdebttoequityratio,themorelikelyitisthatthefirm'smanagerwillselectaccountingproceduresthatshiftreportedprofitsfromfutureperiodstocurrentperiods.Thisistoreducethelikelihoodofthefirmtechnicallybreachingitsdebtcovenants.Selectanalternative:
True
False
Riktig.1av1poeng.
7 Ch3Regulatorycaptureissaidtooccurinwhichofthefollowingsituations?Selectanalternative:
Whentheregulatedco-opttheregulatorsintoperspectivethatgivesthemtheregulationtheyseek
Whentheregulatedentitiescanensurenon-performancebytheregulatingbody
Whentheregulatedentitiescontroltheregulationandtheregulatorybody
Alloftheabove
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8 Ch3
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8 Ch3Agencytheoryassumesthattheinterestsofprincipalsandagentsaregenerallyaligned.Selectanalternative:
True
False
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9 Ch3Proponentsofthefree-marketapproachtotheprovisionofaccountinginformationadvocatethat:Selectanalternative:
Marketmechanismscannotachieveasociallyidealequilibriumpriceforaccountinginformation
Marketforcescanbedependedupontogeneratedesiredinformation
Regulationofaccountinginformationisnecessary
Alloftheabove
Riktig.1av1poeng.
10 Ch3Privateinteresttheorysuggeststhatgovernmentinterventioninthestandardsettingprocessistorectifyfailuresinthemarketforaccountinginformation.Selectanalternative:
True
False
Riktig.1av1poeng.
11 Ch3Inrelationtoaccountingandauditingwhichoftheseisnotatheoryofregulation?Selectanalternative:
Lifecycletheory
Publicinteresttheory
Privateinteresttheory
Regulatorycapturetheory
Riktig.1av1poeng.
12 Ch3
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Alimitationoftheoriesofregulation,suchaspublicinteresttheoryandcapturetheory,isthattheyarenotmutuallyexclusive.Selectanalternative:
True
False
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13 ConceptualFrameworkWhichoftheseisnotoneofthebenefitsofaConceptualFramework?Selectanalternative:
Standardsettingboardswillbemoreaccountablefortheiractions.
Theneedforspecificaccountingstandardsshouldbereduced.
Itencouragesearningsmanagement.
Reportingrequirementswillbemoreconsistentandlogical.
Riktig.1av1poeng.
14 ConceptualFrameworkAccordingtotheConceptualFrameworkExposureDraft,thefinancialeffectsoftransactionsandothereventsareclassifiedintothefollowingelements:assets,liabilities,equity,incomeandexpenses,gainsandlosses.Selectanalternative:
True
False
Riktig.1av1poeng.
15 ConceptualFrameworkAccordingtoConceptualFramework,primaryuserstowhomgeneralpurposefinancialreportsdirectedareSelectanalternative:
Existingandpotentialinvestors
Lenders
Othercreditors
Alloftheabove
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16 ConceptualFramework
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16 ConceptualFrameworkAdisadvantageofrules-basedstandardsforusersofthestandardsis:Selectanalternative:
Theymayreducetheopportunitiesforearningsmanagement
Theyincreasecomparabilityofaccountinginformation
Theyallowforspecificstructuringoftransactionstoworkaroundtherules
Alloftheabovearedisadvantages
Riktig.1av1poeng.
17 ConceptualFrameworkInformationaboutentity'seconomicresourcesandclaimsdoesnothelpuserstoassesswhether:Selectanalternative:
reportingentityneedsadditionalfinancing
reportingentityhassufficientliquidity
reportingentitycanbesuccessfulinobtainingfinancing
reportingentityispayingtoomuchonitsloan
Riktig.1av1poeng.
18 ConceptualFrameworkAdepictionoffinancialinformationthatisfreefromerrormeansitisperfectlyaccurateinallrespects.Selectanalternative:
True
False
Riktig.1av1poeng.
19 ConceptualFrameworkTheconstraint/sonfinancialreportingidentifiedundertheIASBFrameworkare:Selectanalternative:
Timelinessversusneutrality
Understandabilityversusbenefit
Understandabilityversusmateriality
Costversusbenefit
Riktig.1av1poeng.
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20 ConceptualFrameworkIffinancialinformationistobeuseful,itmustbe________and________whatitpurportstorepresent.Selectanalternative:
consistent,faithfullydescribe
useful,faithfullydescribe
comparable,faithfullyrepresent
relevant,faithfullyrepresent
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21 ConceptualFrameworkAccordingtotheExposureDraftoftheConceptualFramework,oneoftheobjectivesofgeneralpurposefinancialreportingistoassistpreparerstodevelopaccountingpolicieswhenStandardsareavailablebutarenotconsistentwiththeFramework.Selectanalternative:
True
False
Riktig.1av1poeng.
22 ConceptualFrameworkThestatementinrelationtoconservatismthatistrueis:Selectanalternative:
Conservatismisinconsistentwiththeprincipleofneutrality
Conservatismmeansrecordingassetsearly
Conservatismmeansnotdepletingfutureresources
Allofthestatementsaretrue
Riktig.1av1poeng.
23 ConceptualFrameworkWhichofthequalitativecharacteristicslistedisnotconsideredtobeoneoftheenhancingcharacteristicsfortheusefulnessoffinancialinformation.Selectanalternative:
Consistency
Understandability
Comparability
Timeliness
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Riktig.1av1poeng.
24 ConceptualFrameworkWhichofthesedescribesqualitativecharacteristiccomparability?Selectanalternative:
Informationfaithfullyrepresentstheeconomicphenomenaitpurportstorepresent.
Useofthesamemethodsforthesameitems,eitherfromperiodtoperiodwithinareportingentityorinasingleperiodacrossentities.
Classifying,characterizingandpresentinginformationclearlyandconcisely.
Itenablesuserstoidentifyandunderstandsimilaritiesin,anddifferencesamong,items.
Riktig.1av1poeng.
25 ConceptualFrameworkBasedontheExposureDraftoftheConceptualFramework,whichoftheseisnotaccurate?Selectanalternative:
Financialstatementsprovideinformationaboutthefinancialeffectsoftransactionsandothereventsofaspecifiedperiod.
Assets,liabilitiesandequityarerecognizedinthestatementoffinancialposition.
Incomeandexpensesarerecognizedinthestatementofprofitorloss.
Financialstatementsarepreparedfromtheperspectiveofaparticulargroupofinvestors.
Riktig.1av1poeng.
26 ConceptualFrameworkWhichofthesedescribesqualitativecharacteristicverifiability?Selectanalternative:
Itenablesuserstoidentifyandunderstandsimilaritiesin,anddifferencesamong,items.
Useofthesamemethodsforthesameitems,eitherfromperiodtoperiodwithinareportingentityorinasingleperiodacrossentities.
Classifying,characterisingandpresentinginformationclearlyandconcisely.
Itmeansthatdifferentknowledgeableandindependentobserverscouldreachconsensus,althoughnotnecessarilycompleteagreement.
Riktig.1av1poeng.
27 Ch6
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AccordingtotheExposureDraftoftheConceptualFramework,currentvaluemeasurementincludesthefollowingapproaches:Selectanalternative:
fairvalueandexactcost
fairvalueandvalueinuse
currentcostandhistoricalcost
historicalcostandfairvalue
Riktig.1av1poeng.
28 Ch6ValueinuseSelectanalternative:
isthepresentvalueofthecashflowsthatanentityexpectstoderivefromthecontinuinguseofanassetandfromitsultimatedisposal.
isbasedonmarket-specificassumptionsinsteadofassumptionsbytheentity.
canbedirectlyobserved.
isthepresentvalueofthecashflowsthatanentityexpectstoobtainasitfulfillsaliability.
Riktig.1av1poeng.
29 Ch6Whichofthesesupportstheuseofcurrentcostaccounting?Selectanalternative:
Itisthemostobjectiveoftheproposedaccountingmethods
Ithelpsmanagementtoallocateresourcesmoreefficiently
Itisonlyusefulifthecompanyplanstoliquidateitsassets
Alloftheabove
Riktig.1av1poeng.
30 Ch6Theargumentthatisdescriptiveofexitpriceaccountingis:Selectanalternative:
Itfocusesonthestewardshipfunctionofmanagers
Itisfocusedonmatchingrevenueandexpenses
Itusesmarketsellingpricestomeasurefirm’sfinancialpositionandperformance
Itusesoriginalpurchasepricetovalueassets
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31 Ch6Whichofthesebestreflectstheargumentthatsupportsthenotionthatexitpricesshouldbeusedformeasurementinsteadofhistoricalcost?Selectanalternative:
Cashisking
Easytoobtainneededdata
Usersneedthistypeofinformationtomakedecisions
Otherinformationisnotavailable
Riktig.1av1poeng.
32 Ch6Underthehistoricalcostaccountingmodelthefinancialstatementthatisregardedasthemostimportantis:Selectanalternative:
Theyareallequallyimportant
Cashflowstatement
Statementoffinancialposition
Statementofprofitandloss
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33 Ch6Matchmeasurementsystemswiththebasisofvaluationforassets.
presentvalueoffuturecashflows sellingprice
originalpurchaseprice
currentmarketbuyingprice
Valueinuse
Historicalcost
Fairvalue
Currentcost
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34 Ch7
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34 Ch7Twomaincharacteristicsofaneconomicresource:i.Itmustbescarceii.Itmusthaveutilityiii.ItmustbecapableofgeneratingcashinflowstotheentitySelectanalternative:
i,ii,
i,iii
i,ii,iii
iii
Riktig.1av1poeng.
35 Ch7Whichrepresentthreeessentialcharacteristicsofanasset?Selectanalternative:
Futurecash,controlbyanentity,resultofcurrentevents
Futureeconomicbenefit,controlbyanentity,resultofpastevents
Presenteconomicbenefit,controlbyaninvestor,resultofpastevents
Noneofthelisted
Riktig.1av1poeng.
36 Ch7Theextentandtimingofrecognitionofassetsareimportantbecause:Selectanalternative:
Theycanaffectthedecisionmakingforusersoffinancialstatements
Theycanaffectthecalculationofratioswhichareimportantinputsfordebtcovenants
Theycanaffectmanagementcompensation
Alloftheabove
Riktig.1av1poeng.
37 Ch7Thestatementconcerningthemeasurementoftangibleassetsthatisnottrueis:
Selectanalternative:
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Selectanalternative:
Thetraditionalapproachhasbeentomeasuretangibleassetsathistoricalcost
IAS16requirestheuseoftherevaluationmodelforsubsequentmeasurementoftangibleassets
IAS16permitstheuseofacurrentvaluemeasurementmodelfortangibleassets
Noneoftheabove
Feil.0av1poeng.
38 Ch7Thevaluationoffinancialinstrumentsmustemphasizemarketinputs.Whichoftheseinputsisconsideredtoprovidethemostreliableevidenceoffairvalue?Selectanalternative:
Level1
Level2
Level3
Level4
Riktig.1av1poeng.
39 Ch7Theuseofacurrentvaluemodelforintangibleassetsis:Selectanalternative:
Common
Prohibited
Rare
Mandatory
Riktig.1av1poeng.
40 Ch7Whichoftheinputsthatareusedtomeasurefairvaluearemostdifficulttoaudit?Selectanalternative:
Level1
Level2
Level3
Allareeasy
Riktig.1av1poeng.
BE-3131AccountingTheory Candidate9518
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41 Ch8InterpretationoftheIASBFrameworksuggeststhataliabilityshouldceasetoberecognisedwhenassetsorserviceshavebeentransferredtootherentitiesinsatisfactionofthedebt.Selectanalternative:
True
False
Riktig.1av1poeng.
42 Ch8Movie“Corporation”showsthedownsideofcorporationsbeinggivenrightsofa:Selectanalternative:
Person
Creditor
Entity
Stakeholder
Riktig.1av1poeng.
43 Ch8Whichis/aredescriptiveoftheproprietorshiptheoryofaccounting:i)Assetsbelongtotheproprietorii)Liabilitiesaretheobligationsoftheentityiii)AnobjectiveofaccountingistodeterminethenetworthoftheownerSelectanalternative:
i
ii
i,iii
i,ii
Riktig.1av1poeng.
44 Ch8Liabilitiesarepresentobligationsarisingfrompastevents,thesettlementofwhichisnotexpectedtoresultinanoutflowofresources.
Selectanalternative:
BE-3131AccountingTheory Candidate9518
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Selectanalternative:
True
False
Riktig.1av1poeng.
45 Ch8Themostcommonlyusedmeasurementmethodforliabilitiesis:Selectanalternative:
Replacementvalue
Historicalcost
Fairvalue
Marketvalue
Riktig.1av1poeng.
46 Ch8Accordingtotheentitytheoryperspective,theassetsbelongtotheownersandtheliabilitiesaretheobligationsoftheowners.Selectanalternative:
True
False
Riktig.1av1poeng.
47 Ch9Whenisrevenuemostlikelytoberecognizedintheearningcycle?Selectanalternative:
Receiptofordersaftercompletingproduction
Completionofproduction
Deliveryofgoodstocustomers
Receiptofcash
Riktig.1av1poeng.
48 Ch9Newstandard-RevenuefromContractswithClients(IFRS15)-focuseson:
Selectanalternative:
BE-3131AccountingTheory Candidate9518
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Selectanalternative:
Paymentterms
Performanceobligations
Lengthofthecustomerrelationship
Realizationofrevenue
Riktig.1av1poeng.
49 Ch9UndertheIASBFramework,revenueencompassesbothincomeandgains.Selectanalternative:
True
False
Riktig.1av1poeng.
50 Ch9Thestatementregardingrecognitionversusrealizationofrevenuethatistrueis:Selectanalternative:
Foranassettobe"realized'theremustbeaninflowofassetsorameasurablechangeinthevalueofanasset
'Recognitionofrevenue'meansaninflowofliquidassets
'Realizable'meanstheassetreceivedisreadilyconvertibletoknownamountsofcash
Alloftheabovearetrue
Riktig.1av1poeng.
51 Ch9Ifrevenuefor2014isunderstatedthen:Selectanalternative:
Profitfor2014isunderstatedandequityisoverstated
Profitfor2014isoverstatedandequityisoverstated
Profitfor2014isunderstatedandequityisunderstated
Noneoftheabove
Riktig.1av1poeng.
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52 Ch10Recordingofwhichexpensebelowistypicallynotbasedontheprincipleofimmediaterecognition?Selectanalternative:
Researchexpenditure
Thecostofthegoodssold
Impairmentexpenses
Advertisingexpenses
Riktig.1av1poeng.
53 Ch10Treatingassetsasexpensesisawaytooverstateprofitsforaperiod.Selectanalternative:
True
False
Riktig.1av1poeng.
54 Ch10Whichoftheseisconsideredtobethe'ideal'waytomatchexpenses?Selectanalternative:
Allocationofcosts
Causeandeffect
Immediaterecognition
Noneoftheabove
Riktig.1av1poeng.
55 Ch10Whendepreciatingassetsusingtheallocationofcostsmethodwhichofthefollowingmethodsisbest?Selectanalternative:
Straight-line
Unit-of-production
Reducing-balance
Itisnotpossibletosay
Riktig.1av1poeng.
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Riktig.1av1poeng.
56 NorwayTwodominantprinciplesinNorwegianGAAP:Selectanalternative:
Recognitionandallocation
Estimationandaccuracy
Conservatismandmatching
Noneoftheabove
Riktig.1av1poeng.
57 NorwayInNorway,companiesthatarenotlistedcanchoosetouseIFRS.Selectanalternative:
True
False
Riktig.1av1poeng.
58 NorwayGovernmentagencythatenforcesIFRSinNorwayis:Selectanalternative:
IASB
Finanstilsynet
FASB
NorskRegnskapsStiftelse
Riktig.1av1poeng.
59 NorwayWhichCompanyActisreferredtoas"accountingrevolution"inNorway?Selectanalternative:
CompanyActof1976
CompanyActof1910
CompanyActof1957
CompanyActof1992
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Riktig.1av1poeng.
60 StandardsWhichoftheseisanargumentforconvergenceinaccountingstandards?Selectanalternative:
Developingnationsmaynotneedascomplexanaccountingsystem
Culturewillstillinfluenceinterpretationandselectionofchoices
Reducefinancialreportingcosts
Differentenvironmentsmaycallfordifferentaccountingsystems
Riktig.1av1poeng.
61 OrganizationsThemissionoftheIASBistodevelop,inthepublicinterest,highqualityaccountingstandardsthatcountriescanuseasthebasisfordesigningtheirownnationalstandards.Selectanalternative:
True
False
Riktig.1av1poeng.
62 OrganizationsThe_________________iscomposedofrepresentativesfromMemberStateswhovoteonwhethernewIFRSsshouldbeadoptedintheEUandEEA.Selectanalternative:
SecuritiesandExchangeCommission
FinancialAccountingStandardsBoard
AccountingRegulatoryCommittee
EuropeanFinancialReportingAdvisoryGroup
Riktig.1av1poeng.
63 OrganizationsInternationalStandardsonAuditing(ISA)aredevelopedbytheIASB.
Selectanalternative:
BE-3131AccountingTheory Candidate9518
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Selectanalternative:
True
False
Riktig.1av1poeng.
64 OrganizationsOneofIASB’sresponsibilitiesistoenforcetheimplementationofitsstandardstoensurethattheobjectiveofhighqualityfinancialreportingisachieved.Selectanalternative:
True
False
Riktig.1av1poeng.
65 OrganizationsTrusteesofIFRSFoundationhavetheresponsibilitytoappointSelectanalternative:
membersofIASB
membersofIFRSInterpretationsCommittee
membersofIFRSAdvisoryCouncil
alloftheabove
Riktig.1av1poeng.
66 TrendsAcronymforExtensibleBusinessReportingLanguageisSelectanalternative:
EBRL
XBRL
TBRL
Noneoftheabove
Riktig.1av1poeng.
67 TrendsThemostwidelyusedsetofguidelinesforsustainabilityreportingarepublishedby:
Selectanalternative:
BE-3131AccountingTheory Candidate9518
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Selectanalternative:
TheFASB
TheIASB
TheSustainabilityInitiative
TheGlobalReportingInitiative
Riktig.1av1poeng.
68 TrendsAn"integratedreport"aimstoexplainSelectbestalternative:
howbusinessessettargetsandputinplacecarbonmanagementinitiativestoreduceemissions.
howbusinesses,governmentsandotherorganizationsimpactsustainabilityissuessuchasclimatechange,humanrights,corruptionandmanyothers.
howbusinessescombatcorruptionandpreventcriminalactivitiesarisingfromcorruption.
howtheorganizationinteractswiththeexternalenvironmentandthecapitalstocreatevalueovertheshort,mediumandlong-term.
Feil.0av1poeng.
69 Essay1Explaintheadvantagesanddisadvantagesofprinciple-basedandrule-basedstandards.
Fillinyouranswerhere
BE-3131AccountingTheory Candidate9518
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Fillinyouranswerhere
Principle-basedAdvantagesforprinciple-basedstandards:Theneedforspecificaccountingstandardsshouldbereduced,astheprinciple-basedstandardscoverswideinsteadofspesificsettings/transactions.Thisisalsoanadvantageasitisreducingtheriskofcreatingloopholesinthestandardsthatmanagerscanusetolegalyminipulatethefinancialreporting.Disadvantagesforprinciple-basedstandards:Itisnotpossibletomakestandardsthatcoverseverytransaction/eventinanoptipalway.Thereforetheusofprinciple-basedstandardthatcoverswide,canbeafailureinsomematters.Althoughtheprinciple-basedstandardscoverswide,itgivesroomforalternativestofightthelatterdisadvantage.Thisagaincanresultindistortionbymanagers.Rule-basedAdvantagesforrule-based:Thetwofundamentalcharacheristicsofusefullaccountinginformationisthatitisrelevantandfaithfullyrepresented.Witharule-basedstardard,thisinformationcanbemorecomparabalandverifyable,hensmoreusefullasthisaretwooftheenhancementcharacteristis.Asitismorespecificandreducechoisesforthemanagersregardingrecognitionandchoiseofmeasurementsystem,itmayreducetheopportunitiesforearningsmanagement,asitcanbelesssubjecttomanipulationanddisortionbythemanagers.Disadvantagesforrule-based:Itispossibletostructurethetransactions/eventstobeabeltoworkaroundtherules,astherule-basedstandardsarespesific,leavingariskforloopholesthatmanagerscanusetomanipulatethefinancialreporting.
Besvart.
70 Essay2Considerhistoricalcostsystemandanswerquestionsbelow.a)Whatistheobjectiveofaccountingandtheroleofprofitunderhistoricalcostsystem?b)Whatcriticismsaremadeofprofitcalculatedunderthehistoricalcostsystem?
Fillinyouranswerhere
BE-3131AccountingTheory Candidate9518
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Fillinyouranswerhere
a)Objectives:-providinginformationfordecisionmaking-stewardshipandaccountabilityThelatteristhemainfocusofaccountingintheperspectiveofhistoricalcostaccounting.Theroleofprofitunderahistoricalcostsystemistoshowthevaluecreatedintheperiod,andistheexcessofrevenuefromoperatingactivities,lesscostofresourcesusedandimpairmantlosses.Gainsarenotregocnisedasapartofprofitunderhistoricalcostsystembutlossesinvalueofassetsare,resultinginimpairmantlosses.Itisaconservativeview.Theprofitmakesthemanager(agent)accountabalfortheprofitithasproducedwiththeamountofusedresourcesintheperiod,puttingfocusonthestewardship,andwhathasbeenaccomlished,ratherthanforward-lookingangelofreporting.Usingmathcingofexpencestorelatedrevenueasunderhistoricalcostisthemostunderstudconseptofprofit.b)Theconseptofprofitunderhistoricalcostreceivescriticismasitisheavilyrelyingonmatchingexpencestorevenueintheperiod.Themethodeusedtomatchcanbeseenasarbatry,anisasubjecttomanipulation,andisseenasalmostimpossibleinpractise.Thecalculationofdepreciationsishardtoauditandverifyasitisrelyingoninternalfactorsandsubjectivejudgementsandpossiblealternatives.Althoughtheprofitconseptisthebestunderstood,ithasafocusontheincomestatement(profitandlossstatement).Thisisinconflictwiththetrendtowardsashifttoabalance-sheetfocus(financialposition)intheinternationalstandards.Theprofitconseptthereformakesthebalance-sheetsecondaryandlessimportant,anda"dumpingground"forassetsandcostwaitingtobeexpiredandconsumed/usedandrecognisedasexpenses.Thecritisalsopointsoutthatgainsshouldberecognisedasprofit,andshouldnotbeunderstadeduntilitisactuallyrealised.Thecriticsaltsostatethattheprofitisonabasisofinformationthatisnotascurrentasothermeasurementsystems.
Besvart.
71 Essay3Standardsettershavebeencriticizedforbeing‘balancesheetbiased’.a)Whatdoesthismean?b)Whatevidenceisavailabletosupportthiscriticism?Fillinyouranswerhere
a)Thestandardsettershavedesidedtomakethebalance-sheetparamount,andtheincome-statementsecondary.Thismeansthatprofitandlossesaredirectlyimpactedbychangesinassetsandliabilities.Asthestandardsettershavemadethischoise,itshowsthatitisnotsupportedbyneutrality,asitisasubjectivechoise,basedonmanypoiticalbiasesandpressureformpublicinstrestgroups,battelingfortheirownself-intrest.b)Thedefinitionofincome(includingrevenue)pointsoutthatitisaresultofincreasingvalueofassets(decreaseifexpenses)ordecreaseinliabilities(increaseifexpences),resultinginchangesinownersequityotherthanownerscontribution(ordisributions).Thisshowsthatitispossibletoimpacttheprofit,withouthavinganyrevenue,justbyrevaluatetheassetsonthebalancesheetintimesofrisingprices,andchoosingtherightwayofmeasurmentstomaximiseit.Anevidenceoftheoppositeway,istheimplementationofIAS39inEU,wheremassivepoliticalpreassureresultedinaEUcarve-out,togivethebanksrelieftoavoidfurtherbankcollaps.
Besvart.
