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Financial Accounting Theory Question Paper

Financial Accounting Theory

Course:Bachelor Of Commerce

Institution: Kca University question papers

Exam Year:2010

UNIVERSITY EXAMINATIONS: 2010/2011
THIRD YEAR EXAMINATION FOR THE DEGREE OF BACHELOR OF
COMMERCE
CAA 301: FINANCIAL ACCOUNTING THEORY (SUNDAY)
DATE: DECEMBER 2010 TIME: 2 HOURS
INSTRUCTIONS: Answer ALL questions
QUESTION ONE
a) Conceptual framework is the generally accepted constitution in accounting profession. Discuss its
importance with regard to the profession. (5Marks).
b) Conceptual framework as much as it serves as the constitutional reference in accounting is not
universally accepted due to a number of factors. Highlight such factors (5Marks)
c) Qualitative characteristics of accounting information relates to the second level of conceptual
framework .Discuss in detail , the primary qualitative characteristics relating to the content and
presentation of information with particular emphasis to their importance. (10marks).
QUESTION TWO
a) Financial statements prepared under historical cost convention do not have regard for changes in
price levels and therefore do not reflect financial realities. Discuss five limitations that statements
prepared by historical cost accounting possess that reduces their utility to the users. (10Marks)
b) Adjusting for effects in price changes may take general or specific forms. Highlight the case for and
against.
i) Replacement cost accounting. (5Marks)
ii) Realizable value accounting (5Marks)
2
c) Give five reasons as to why the study of financial accounting theories is relevant. (5Marks)
QUESTION THREE
a) Discuss the case for the measurement and reporting of the cost and value of people in an
organization. (5 marks)
b) Discuss how cost based method is used as a tool of measurement in human resource accounting with
specific emphasis on historical costs, replacement costs, and opportunity costs. (5Marks)
c) Citing relevant examples, explain how non monetary methods may be used in determining the
economic value of human resource. (5Marks)
QUESTION FOUR
a) Accounting, like any other discipline has rules and guidelines that guide accountants to create,
preserve and present financial statements. Provide an evaluation of any five such rules and guide lines
highlighting their importance. (8Marks)
b) Financial statements can never be complete if are not accompanied by footnotes. List 7 disclosures
that need to be captured in the notes and explain their importance. (7Marks)

Financial Accounting Theory Question Paper

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