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Financial Accounting Theory (D+E) Question Paper

Financial Accounting Theory (D+E)

Course:Bachelor Of Commerce

Institution: Kca University question papers

Exam Year:2011

UNIVERSITY EXAMINATIONS: 2010/2011
THIRD YEAR EXAMINATION FOR THE DEGREE OF BACHELOR OF
COMMERCE
CAA 301-A : FINANCIAL ACCOUNTING THEORY (D+E)
DATE: AUGUST 2011 TIME: 2 HOURS
INSTRUCTIONS: Answer All The Questions
Question One
In order to enhance the gearing, the director of your company is proposing change of accounting policy
from historical cost accounting to revaluation of the property plant and equipment. The director is also
proposing certain financial assets to be valued at fair value.
Required
a) Discuss the various basis of measurement that may be applied in respect to company asset and
whether the directors proposal are acceptable (8 Marks)
b)Outline the limitation of financial statements based on historical costs (6 Marks)
c) State the relevant disclosure that should be made in the financial statements in respect to fair
value basis of measurements (6 Marks)
Question Two
The global financial market is becoming more integrated for better or for worse. This will command a
common financial reporting frame work.
a) Discuss the content of financial reporting framework (8 Marks)
2
b)Outline the benefit of a converged reporting framework (6 Marks)
c) Discuss the various challenges that confront standard setters toward achieving a common
reporting frame work. (6 Marks)
Question Three
Explain how the following accounting theories apply in setting up a common conceptual framework.
i) Normative accounting theory (4 Marks)
ii)Deductive accounting theory (4 Marks)
iii) Inductive accounting theory (4 Marks)
iv) Positive accounting theory (3 Marks)
Question Four
The usefulness of financial information depends on its ability to meet the need of various group of
users. As part of the attempt to meet the information need gap, the move is toward more non financial
disclosure.
Required
a) State the emerging users of the financial statement and their information needs (4 Marks)
b)Discuss the qualitative attributes of the financial information (8 Marks)
c) Discuss criteria to be applied by management in determining materiality thresholds (3 Marks)

Financial Accounting Theory (D+E) Question Paper

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