1.Which of the following is likely to reflect economic reality.

a. current cost

b.fair value

c. historical cost

d.market value

2.which of the following statements is incorrect.

a. market value is ideally based on active markets

b. current cost is relevant for replacement decisions

c.historical cost is easy to verify

d. fair value is not reliable

I FREE RIDER

II LOBBY

III FREE MARKET

IV STANDARD SETTERS

use the information above to answer questions 3 and 4

3.Which of the following statements is incorrect.

a. I are likely to over-demand accounting information because it is free

b.II requires financial resources amd organization

c. III will ensure that firms disclose comparable information.

d. IV could be government or another body

4.which of these terms are associated with private interest theory.

a. I AND II

b. III AND IV

c. I AND IV

d. II AND III

Use the following to answer 5 and 6

I INTERVAL SCALE

II NOMINAL SCALE

III ORDINAL SCALE

IV RATIO SCALE

5.Which of the above could be used for ranking?

a. I AND IV

b. II AND III

c. ONLY III

d. I, III AND IV

6.Jane calculated the material quantity variance by comparing the standard cost of materials (set by management) with the actual cost of materials. the standard cost was $10 000 and the actual cost was $10 200. therefore teh materials quantity variance was $200 unflavourable. the variance is based on:

a.I

b. II

c. III

d. IV

use the following to answer 7 and 8

PREMISE 1 - ALL EQUITY ACCOUNTS HAVE CREDIT BALANCE

PREMISE 2- DIVIDEND PAID IS AN EQUITY ACCOUNT

CONCLUSION- DIVIDEND PAID HAS A CREDIT BALANCE

7.The conclusion above has been derived from

a. Deduction

b. Induction

c. Observation

d. Scientific approach

8.the conclusion above is

a. syntactically valid but semantically incorrect

b. syntactically invalid but semantically correct

c. syntactically valid and semantically correct

d. syntactically invalid and semantically incorrect

use the information below to answer 9 and 10

I DESCRIPTIVE PRAGMATIC APPROACH

II PSYCHOLOGICAL PRAGMATIC APPROACH

III NORMATIVE ACCOUNTING APPROACH

IV POSITIVE ACCOUNTING APPROACH

9.Which of the following statements is incorrect.

a. historical cost emerged through approach I

b. under approach II, the usefulness of financial statements is evaluated through users responses

c. continuously comtemporary accounting was developed through approach III

d. approach IV is generally associated with the naturalistic approach to research.

10.Which of the following statements is incorrect.

a. I describes the accounting methods used by accountants.

b.II predicts the accounting methods preffered by users.

c.III prescribes how accountants should measure income.

d. IV explains accounting choices made by firms.