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1.6: It is common practice for managers to be rewarded in a way that is tied to the profits of the firm, the sales of

image text in transcribedimage text in transcribed 1.6: It is common practice for managers to be rewarded in a way that is tied to the profits of the firm, the sales of the firm, or the return on assets. That is, their remuneration is based on the output of the accounting system. Which of the following is a drawback for such bonus schemes? A. Bonus schemes tied to the performance of the firm will be put in place to align the interests of the owners and the managers. B. Rewarding managers based on accounting profits may induce them to manipulate accounting numbers. C. There would be little incentives for the manager to adopt risky strategies that increase the value of the firm. D. The manager may be reluctant to take on optimal levels of debt. Question 1.7: Which of these is NOT a criticism of historical cost accounting? a. It is not objective and is open to manipulation b. Historical cost overstates profit in times of rising prices C. Cost information is now always available d. The business has applied it over many centuries Question 1.8: An argument against fair value measurement in accounting is: a. Market prices are too objective b. It does not allow enough professional judgement C. It can lead to volatility in earnings d. It reflects the value of the item today Question 1.9: Which of the following is not a characteristic of an asset, according to the International Accounting Standard Board (IASB) Conceptual Framework? A. There is an expected future economic benefit. B. The transaction or event giving rise to the ownership over future economic benefits must have occurred. C. The reporting entity must have control over the resource to benefit from it or to deny or regulate the access of others to the benefit. D. The entity must have ownership over the resource giving rise to future economic benefits. ACCT5015d Contemporary Issues in Accounting M (Special) Question 1.10: Which of the following statements is true regarding the origins and development of Positive Accounting Theory? A. Positive research in accounting started coming to prominence around the mid-1960s and appeared to become the dominant research paradigm within financial accounting in the 1970s and 1980s. B. The introduction of positive research into accounting represented a paradigm shift from normative research to positive research. C. Currently, almost all papers in Accounting Review and most other leading academic journals are positive research-based. D. All the given options are correct

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