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    Accounting Theory Midterm1

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    mohammad qabaja
    This document contains a midterm exam for a Financial Accounting Theory course. It includes 3 questions: 1) Identifying qualitative characteristics, accounting elements, and conceptual framework assumptions from descriptions. 2) Answering yes or no to statements about monitoring expenditures, risk, losses, the conceptual framework, and the weak form of the efficient market hypothesis. 3) Explaining the differences between physical and financial capital maintenance concepts, why fundamental analysis is not useful according to the efficient market hypothesis, what causes the agency relationship between shareholders and managers, and how income is determined under different valuation methods.

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    Accounting Theory Midterm1

    Uploaded by

    mohammad qabaja
    89 views2 pages
    This document contains a midterm exam for a Financial Accounting Theory course. It includes 3 questions: 1) Identifying qualitative characteristics, accounting elements, and conceptual framework assumptions from descriptions. 2) Answering yes or no to statements about monitoring expenditures, risk, losses, the conceptual framework, and the weak form of the efficient market hypothesis. 3) Explaining the differences between physical and financial capital maintenance concepts, why fundamental analysis is not useful according to the efficient market hypothesis, what causes the agency relationship between shareholders and managers, and how income is determined under different valuation methods.

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    This document contains a midterm exam for a Financial Accounting Theory course. It includes 3 questions: 1) Identifying qualitative characteristics, accounting elements, and conceptual framework assumptions from descriptions. 2) Answering yes or no to statements about monitoring expenditures, risk, losses, the conceptual framework, and the weak form of the efficient market hypothesis. 3) Explaining the differences between physical and financial capital maintenance concepts, why fundamental analysis is not useful according to the efficient market hypothesis, what causes the agency relationship between shareholders and managers, and how income is determined under different valuation methods.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    89 views2 pages

    Accounting Theory Midterm1

    Uploaded by

    mohammad qabaja
    This document contains a midterm exam for a Financial Accounting Theory course. It includes 3 questions: 1) Identifying qualitative characteristics, accounting elements, and conceptual framework assumptions from descriptions. 2) Answering yes or no to statements about monitoring expenditures, risk, losses, the conceptual framework, and the weak form of the efficient market hypothesis. 3) Explaining the differences between physical and financial capital maintenance concepts, why fundamental analysis is not useful according to the efficient market hypothesis, what causes the agency relationship between shareholders and managers, and how income is determined under different valuation methods.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    of 2

     

     Hebron University
    College of Finance & Management
    Department of Finance And Accounting
    :Course name Financial Accounting Theory .Course No 62303
    # Exam Midterm Exam :Semester Summer Semester19/20
    : Instructor Name Ziad S. Zarir :Exam Date 30/6/2020
    :Student Name :Student ID
    Total Result: /30

    Q1--------------------------------------------------------------------------------------------------------------"14 Points"
    A. Identify the appropriate qualitative characteristic(s) to be used given the information
    provided below. "4 points"

    1. Includes all the information that is necessary for a faithful representation of the economic
    phenomena that it purports to represent.
    2. Qualitative characteristic being employed when companies in the same industry are using the same
    accounting principles.
    3. Ignores the economic consequences of a standard or rule.
    4. An item is not recorded because its effect on income would not change a decision.

    B. Identify the element or elements that is most directly related to measuring the performance
    and financial status of an enterprise that associated with the following: "5 points"

    1. Obligations to transfer resources arising from a past transaction.


    2. Items characterized by service potential or future economic benefit.
    3. Residual interest in the assets of the enterprise after deducting its liabilities.
    4. Equals increase in assets less liabilities during the year, after adding distributions to owners and
    subtracting investments by owners.

    C. Select the assumption, principle, or constraint that most appropriately justifies the following
    operational guidance and practices that have developed overtime " don`t use qualitative
    characteristics":"5 points"

    1. Assumes that the dollar is the measuring stick used to report on financial performance.
    2. AB Corporation reports information about pending lawsuits in the notes to its financial statements.
    3. Intangible assets are amortized over periods benefited.
    4. AZ recognizes depreciation expense for a machine over the 2-year period during which that
    machine helps the company earn revenue.
    5. Each enterprise is kept as a unit distinct from its owner or owners.

    1
    Q2----------------------------------------------------------------------------------------------------------------"6 Points"
    :Answer the following statements with Yes or No

    1- One of the monitoring expenditures example is internal auditors.


    2- Systematic risk is the risk that can`t be avoided through diversification.
    3- Losses are decreases in equity " net assets" from peripheral or incidental transactions of an entity
    and from all other transactions and other events and circumstances affecting the entity during a
    period except those resulting from expenses.
    4- The first level of the conceptual framework identifies the recognition and measurement concepts
    used in establishing accounting standards.
    5- According to the weak form of EMH, an investor cannot make excess returns on the basis of simple
    knowledge of past prices.
    6- Business income is the change in net assets during the accounting period.

    Q3--------------------------------------------------------------------------------------------------------------"10 Points"

    A. Explain the major difference between physical and financial capital maintenance concept? ​"3
    points"
    B. According to the EMH, why Fundametal Analysis is not a useful investment decision tool? "
    point"
    C. An Agency relationship exists between shareholders and managers because of?​ "3 points"
    D. Explain how income is determined under entry price, exit value and discounted PV?​ "3 points"

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