#1: (20 points) 1. Which of the following concepts provides a framework for analyzing financial reporting incentives between managers and owner? a. Pragmatic theory b. Agency theory c. Information symmetry d. private contracting 2. Which of the following has been cited as a reason for alleged low quality of financial reporting, even under regulation? a. Not enough management flexibility in the choice of accounting policies. b. Poor accounting and auditing standards c. Laxity by securities analysts d. All of the above 3. Which of the following is considered a social goal related justification for imposing financial reporting regulation? a. Information symmetry b. Comparability c. A competitive capital market d. All of the above 4. Mandatory public reporting of financial information: a. Enhances the perceived fairness of the capital market. b. Increases the total cost to society of obtaining the information. c. Results in costs greater than benefits. d. Requires companies to generate a lot of information that would not otherwise be produced by its accounting system. 5. The focus of accounting regulation is on: a. Mandatory reporting. c. Standards overload. b. Improving the quality of reported information. d. Underproduction of accounting information. 6. Which of the following groups is not listed in your text as being affected by accounting regulation? a. The FASB b. Companies c. Auditors d. Free riders 7. Which of the following is a reason that the FASB should closely watch the lobbying behavior of free rides? a. Responding to the interests of free riders could lead to an underproduction of accounting information. b. Free riders claim to be acting in the public interest but actually make the market less competitive. c. Free riders are not affected by accounting regulation. d. Free riders do not have the direct economic interests in information production that others have