Chapter 2
Multiple Choice
1. Which early accounting theorist was among the first to express the view that all changes in the
value of assets and liabilities should be reflected in the financial statements?
2. Which of the following economists most influenced the views of DR Scott?
3. Which of the following is not one of DR Scott’s hierarchy of accounting postulates and
principles?
4. Which of the following organizations published the monograph titled A Tentative Statement of
Accounting Principles Affecting Annual Corporate Reports
5. Which of the following organizations published the monograph titled A Statement of Accounting
Principles?
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6. Who was the author of Accounting Research Study No. 1, The Basic Postulates of Accounting?
7. Which of the following is not an approach to accounting theory As categorized by Statement on
Accounting Theory and Theory Acceptance?
8. What is the objective of financial reporting?
9. Under Statement of Financial Accounting Concepts No. 8, confirmatory value is an ingredient of
the primary quality of
10. Which of the following is considered a constraint by Statement of Financial Accounting Concepts
No. 8?
11. Under Statement of Financial Accounting Concepts No. 8, which of the following is an ingredient
of the primary quality of relevance?
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12. Under Statement of Financial Accounting Concepts No. 8, which of the following is an ingredient
of the primary quality of faithful representation?
13. Under Statement of Financial Accounting Concepts No. 8, the ability through consensus of
measures to ensure that information represents what it purports to represent is an example of the
concept of
14. Under Statement of Financial Accounting Concepts No. 8, which of the following relates to both
relevance and reliability?
15. Under Statement of Financial Accounting Concepts No. 8, which of the following is not a
qualitative characteristic associated with faithful representation?
16. What is meant by comparability when discussing financial accounting information?
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17. What is meant by consistency when discussing financial accounting information?
18. An item is considered material if
19. What is the purpose of Emerging Issues Task Force?
Essay
1. Discuss the contributions of Paton and Canning to the development of accounting theory.
2. Discuss the contribution DR Scott to the development of accounting theory.
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3. Discuss DR Scott’s hierarchy of postulates and principles.
4. Discuss the contributions of the works by Sanders Hatfield and More, and Paton and
Littleton to accounting theory.
5. Discuss accounting Research Study No. 1.
Accounting Research Study No. 1, The Basic Postulates of Accounting, was published in 1961. It
consisted of a hierarchy of postulates encompassing the environment, accounting, and the
imperatives as follows:
Group A Economic and Political Environmental Postulates
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6. How did ASOBAT define accounting and what two new ideas arose from this monograph?
7. Discuss the objectives of accounting as outlined by the T rueblood Committee.
8. What were the approaches to accounting theory identified by SATTA?
9. According to Kuhn, how dies scientific progress occur?
10. What is the purpose of the conceptual framework?
11. Define the following terms:
12. According to SFAC No. 5, what should a full set of financial statements for a period show?
13. What is the purpose of SFAC No. 7: “Using Cash Flow Information and Present Value in
Accounting Measurements?
14. What two approaches to present value were discussed in SFAS No. 7?
15. Discuss the qualitative characteristics of accounting information as outlined in SFAC No. 8
16. Discuss the issue of principles based vs. rule based accounting standards.
17. Discuss how the FASB and the IASC acted to improve comparability under the Norwalk
Agreement.