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Q. Which of the following statements is NOT TRUE about the Normative Accounting Theories? A. They are not developed simply on the basis of observing what people (accountants) currently do. B. Should be evaluated on whether they reflect actual accounting practice. C. They provide prescription and tell what accountant should do. D. They are what the researcher believes should occur in particular circumstances. Q.2 Why have Normative Accounting theories been criticised? A. Positive theorists argue that they would prefer to provide information about expected. Implications of actions and let others decide themselves what they should do. B. All of the options are correct. C. They are based on personal opinion about what should happen. D. Positive theorists also make value judgements. Q.3 Accounting theories consider: A. who needs accounting information. B. why particular accounting rules are mandated by regulators. C. none of these. D. who will be responsible for accounting regulation. Q.4 The early development of accounting theory relied upon the process of: A. induction. B. either induction or deduction C. deduction D. both induction and deduction Q.5 Which of the following statements is NOT TRUE about the Positive Accounting Theory? A. It seeks to predict and explain why accountants elect to adopt particular accounting methods in preference to others. B. It is not based on 'rational economic person' assumption. C. It was developed by Watts and Zimmerman. D. It is a specific example of accounting. Q.6 The free-market perspective of accounting regulation suggests that accounting information: A. should be provided free of charge. B. should be free of considerations and lobbying of the market. C. will require regulation to avoid underproduction of information. D. should be provided like any other good that is subject to demand and supply. Q.7 Which of the following statements shows that Adam Smith advocated a regulatory approach? A. Leaving activities to the control of market mechanisms will protect market participants. B. None of the given options are correct. C. Without regulatory involvement, productive resources will find their way to the most productive uses. D. The government needs to be involved in the 'public interest' to protect the more vulnerable. Q.8 Which of the following may be an example of Accounting theories? A. It prescribes the method of measuring the elements of accounting. B. None of these. C. It prescribes particular accounting software to be used. D. It directs the mandatory qualification required to be an accountant. Q.9 Which of the following statements is TRUE about accounting regulation? A. It is developed by an independent authoritative body that has been given the power to govern how financial statements are to be prepared. B. It incorporates a basis for monitoring and enforcing compliance with the specific regulatory requirements. C. All of the options are correct. D. It is a set of prescribed rules that provide authoritative direction. Q.10 Accounting regulation is said to be a political process because: A. regulations affect the distribution of income in a society. B. accounting regulations are concerned only with shareholders' funds. C. accounting regulations are prepared by politicians. D. regulations have no effect on the distribution of income in a society. Q.11 Why is accounting regulation considered as an outcome of a political process?

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