Chapter 1—AN INTRODUCTION TO ACCOUNTING THEORY Accounting Theory: 8th edition Page 1 of 11 TRUE/FALSE QUESTIONS 1. Financial accounting refers to accounting information that is used by management for decisionmaking purposes. ANSWER: False 2. Accounting theory includes the basic rules, definitions, and principles that underlie the drafting of accounting standards and how they are derived. ANSWER: True 3. Accounting theory includes conceptual frameworks, accounting legislation, valuation models, and hypotheses and theories. ANSWER: True 4. Hypotheses and theories are based on an informal method of investigation. ANSWER: False 5. Replacement cost as a measure of asset value is generally more reliable than historical cost. ANSWER: False 6. Accounting theory is developed and refined by the process of accounting research. ANSWER: True 7. Indirect measures are usually preferable to direct measures because they are less costly to obtain. ANSWER: False 8. Assessment measures are concerned with particular attributes of objects and are always direct measurements. ANSWER: False 9. When a direct assessment measure is used, there is always only one correct measure. ANSWER: False 10. The simplest type of measuring system is the nominal scale. ANSWER: True 11. A chart of accounts is an example of an ordinal classification. ANSWER: False