In Evaluating Theories of Accounting,which of the Following Is Not

question 10

Multiple Choice

In evaluating theories of accounting,which of the following is not true?

• A) Different theories are often the result of working in different paradigms, which provide greatly different perspectives.
• B) Positive Accounting Theory is an example of a theory that is value free.
• C) Selecting a theory, topic, design or method for research is based on value judgements.
• D) All theories of accounting, and assumptions on which they are based, are abstractions of reality, and so choice is based on how closely the theory fits our own perceptions.

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Definitions:

Analysis

The examination and evaluation of the relevant information to select the best course of action from among various alternatives.

Cash Flows

Cash flows refer to the net amount of cash and cash-equivalents being transferred into and out of a business.

NPV (Net Present Value)

A method used in capital budgeting to evaluate the profitability of an investment or project, calculated by subtracting the total present values of cash outflows from the total present values of cash inflows.

IRR (Internal Rate of Return)

A financial metric used to estimate the profitability of potential investments, calculated as the discount rate that makes the net present value (NPV) of all cash flows from a particular project equal to zero.