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Question
Agency theory holds that management always tries to maximize the value of the firm.Answer
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Related questions
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A _____ occurs when the subsidiary's stock is distributed to the combinor's shareholders as a dividend.
a. Spin-off
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c. Split-up
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The criteria for capitalizing a real estate lease are identical to those of other leases.
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SFAS No. 13 identifies four capitalization tests that are now applicable to both lessees and lessors.
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Which of the following is not true statement?
a. Exit value denotes the selling price that can be received from the firm's assets when sold through a process of orderly liquidation.
b. Exit value is a form of opportunity cost.
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According to the text, which of the following has posed the single greatest problem that is faced in accounting theory?
a. Historical costing
b. Additivity
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SFAS No. 157 may result in a decrease in financial statement comparability among firms.
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Under SFAS No. 157, if an asset is valued from and "in-use" perspective, its value is based on its use in combination with other assets.
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The majority of exceptions to the general rule regarding revenue recognition have evolved because new transactions have emerged that do not fit the mold of traditional transactions.
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The income statement is largely a legacy of fifty years of accounting standards based on the revenue-expense approach.
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Which of the following does not apply to a codificational system such as accounting standards?
a. It is pragmatic because maximizing the standards is impossible.
b. Outputs are evaluated on the basis of whether they work correctly.
c. Outputs are evaluated on the basis of whether they provide information to users at a reasonable cost.
d. Outputs are correct in terms of deductive logic.
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An argument supporting regulation is that the only way to increase production of public goods to meet the real demand of the public is through regulatory intervention.
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An argument supporting accounting regulation is that it is better to force mandatory reporting than to have individuals competing to buy information privately.
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An argument in favor of unregulated markets is that because of private opportunities to contract for information, market intervention in the form of mandatory disclosure rules is both unnecessary and undesirable.
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Only firms that perform well have incentives to report their operating results.
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Discuss the regulation question in terms of determining and meeting the demand for accounting information. Who pays for and who benefits from accounting information?
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How might the AICPA regain some of the power it has lost over the years? Are there any disadvantages to these proposals?
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Explain how Sarbanes-Oxley of 2002 significantly changes how the FASB will operate in the future.
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Do the SFACs that constitute the conceptual framework establish generally accepted accounting principles? What are the benefits and limitations of this approach?
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Which of the following is a true statement?
a. The eight SFACs that comprise the conceptual framework were not evolutionary because they were derived from previous documents such as the Trueblood Report and ASOBAT.
b. The definitions of SFAC No. 6 were basically a restatement of the definitions of APB Statement 4.
c. The Achilles' heel of the document is SFAC No. 5, which reaffirmed historical cost as the basic measurement system.
d. The key document in the series of SFACs that comprise the conceptual framework is SFAC No. 1.
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SFAC designated which of the following as the term to indicate the comprehensive or total change in net assets occurring during the period as a result of operations?
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Which of the following is a pervasive constraint under the "original" qualitative characteristics of accounting, pre-SFAC No. 8? It is an entity-specific constraint post SFAC No. 8.
a. Decision usefulness
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The definitions of SFAC No. 6 are virtually identical to those in SFAC No. 3 except that they are extended to nonbusiness organizations.
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SFAC No. 5 appears to deny one of the main tenets of the efficient-markets hypothesis.
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With regard to users, SFAC No. 1 established that financial statements should be aimed at a common core of similar information users.
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Identify and explain the two primary objectives of financial statements and the two secondary objectives of financial statements.
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Currently accepted alternative depreciation methods illustrate that accounting is closer to an art than a science.
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Information economics research is usually inductive in nature.