Professional Documents
Culture Documents
to accompany
Prepared by
Matt Tilling
Correct answer: d
Learning Objective 5.1 ~ Evaluate how theories can enhance our understanding of accounting
practice.
Correct answer: b
Learning Objective 5.1 ~ Evaluate how theories can enhance our understanding of accounting
practice.
3. A normative theory
Correct answer: c
Learning Objective 5.2 ~ Identify the types of theories used in accounting.
4. A positive theory
Correct answer: b
Learning Objective 5.2 ~ Identify the types of theories used in accounting.
Correct answer: c
Learning Objective 5.3 ~ Explain the general tenets of positive accounting theory and examine
how it explains accounting practice and disclosures.
Correct answer: c
Learning Objective 5.3 ~ Explain the general tenets of positive accounting theory and examine
how it explains accounting practice and disclosures.
a. Short-term focus
b. Risk aversion
c. Dividend retention
*d. All of the above
Correct answer: d
Learning Objective 5.3 ~ Explain the general tenets of positive accounting theory and examine
how it explains accounting practice and disclosures.
a. Dividend retention
*b. Asset substitution
c. Over-investment
d. All of the above
Correct answer: b
Learning Objective 5.3 ~ Explain the general tenets of positive accounting theory and examine
how it explains accounting practice and disclosures.
9. Which of the following is NOT an important role for accounting in the agency
relationship?
Correct answer: a
Learning Objective 5.3 ~ Explain the general tenets of positive accounting theory and examine
how it explains accounting practice and disclosures.
a. Self-interested
*b. Likely to conform to external norms
c. Risk-adverse
d. All of the above
Correct answer: b
Learning Objective 5.4 ~ Explain institutional theory and examine how it explains
organisational structures.
11. According to institutional theory which of the following statements is NOT true about
corporate social and environmental disclosure
Correct answer: c
Learning Objective 5.4 ~ Explain institutional theory and examine how it explains
organisational structures.
*a. Organisations can only continue to exist if they demonstrate values consistent
with society at large.
b. Organisations should focus on wealth maximisation for their owners
c. The business of business is business
d. Consumers are only interested in minimising costs to themselves.
Correct answer: a
Learning Objective 5.5 ~ Explain legitimacy theory and examine how it explains accounting
13. Which of the following is NOT one of the four ways an organisation can obtain or
maintain organisational legitimacy according to Lindblom?
disclosure practice.
Correct answer: d
Learning Objective 5.5 ~ Explain legitimacy theory and examine how it explains accounting
Correct answer: c
Learning Objective 5.6 ~ Explain stakeholder theory and examine how it prescribes and explains
15. Which of the following is NOT considered a stakeholder according to the managerial
branch of stakeholder theory?
accounting disclosure practice.
a. Communities
*b. Competitors
c. Customers
d. None of the above, i.e. they are all considered stakeholders
Correct answer: b
Learning Objective 5.6 ~ Explain stakeholder theory and examine how it prescribes and explains
Correct answer: d
Learning Objective 5.6 ~ Explain stakeholder theory and examine how it prescribes and explains
Correct answer: c
Learning Objective 5.7 ~ Explain contingency theory and examine how it prescribes and
explains
Correct answer: d
Learning Objective 5.7 ~ Explain contingency theory and examine how it prescribes and
explains
19. Agency theory would hold that managers on compensation contracts which have bonuses
tied to a current measure of performance would prefer to:
Correct answer: d
Learning Objective 5.8 ~ Outline the different decisions made by accounting practitioners.
20. Which of the following theories have been used to explain voluntary disclosure in the
annual report?
a. Stakeholder Theory
b. Legitimacy Theory
c. Institutional Theory
*d. All of the above
Correct answer: d
Learning Objective 5.8 ~ Outline the different decisions made by accounting practitioners.