ACC304 Accounting Theory MCQ

2. Which research question would NOT be answered using behavioural accounting research?

a. How does an auditor judge the riskiness of an audit client?

b. How does a bank loan officer decide whether to grant a loan to a client?

c. How does the stock market react to the disclosure of upward asset revaluations?

d. What are the most useful accounting disclosures for users of financial reports?

3. The statement that is TRUE with respect to the Brunswik lens model is:

a. It is not as good as process tracing methods at predicting the event of interest

b. A and B

c. It has provided insights into the stability of human judgement over time

d. The results of research using this model can be used to train decision makers to change the weightings they give to different information cues

4. The use of the Brunswik lens model has led to the discovery of the following insights, EXCEPT: a. Patterns of cue use evident in various tasks b. The circumstances under which a model of human behaviour outperforms humans c. The step-by-step process of decision-making d. The stability of human judgement over time

5. The heuristic (rule of thumb) 'availability' can be described as: a. Judging the probability that a particular item comes from a particular population by determining the extent to which the item is representative of the population b. One general judgement process in which an initially generated or given response serves as an anchor, and other information is used to adjust that response c. None of the option d. The assessment of the probability of an event based on the ease with which instances of that event come to mind

6. With respect to the probabilistic judgement model, the TRUE statement is: a. Research suggests that while the model is logical, humans do not appear to apply statistics intuitively b. It is normatively correct to revise your initial beliefs by applying Bayes's theorem c. The revised probability in light of additional evidence = the original belief multiplied by the amount by which prior expectations should be revised d. All of the options are true

7. Which of this is NOT a model relied heavily on in applying human judgement theory to accounting issues? a. The efficient market model b. The process tracing model c. The Brunswik lens model d. The probabilistic judgement model

8. Which of this is TRUE of the research evidence obtained in the literature regarding the presentation of financial information? a. On the whole, research evidence does not suggest that accounting report formats influence decision-making b. The theory regarding which forms of information presentation are most appropriate is well developed c. The question the decision maker is answering and the form of presentation interactively affect performance d. Decision makers are readily able to use information presented in a graphical format

9. Which of these accounting research types can be called 'normative' research? a. Behavioural research b. Capital market research c. Agency theory d. None can be called normative research

10. The rule of thumb that refers to a general judgement process in which an initially generated or given response serves as an anchor and other information is used to adjust that response is: a. Anchoring and adjustment b. User friendliness c. Availability anchoring and adjustment d. Representativeness

11. The statement concerning research on expert judgement that is CORRECT is: a. Audit experts have better recall, integrative abilities and error frequency learning ability than do novices b. All of the statements are correct c. Human's both short and long term memories have very limited capacity d. Auditors do not exhibit evidence of the use of rules of thumb

12. It is NOT true regarding research conducted using the Brunswik lens model: a. Replacing people with predictive models does not increase predictive accuracy b. All of the options are NOT true c. It is the subject's choice of information, not his or her processing of the cues, that limits accuracy d. Expert and non-expert subjects are over-confident of their ability in specific judgement tasks