ACC5208 (F) / Page 1 of 2

INTI INTERNATIONAL UNIVERSITY

BACHELOR OF ACCOUNTANCY (HONS) PROGRAMME

ACC5208: ACCOUNTING THEORY AND PRACTICE
FINAL EXAMINATION: JANUARY 2015 SESSION

This paper consists of TWO (2) sections. Answer the TWO compulsory questions in SECTION A and
any TWO (2) questions from SECTION B in the answer booklet provided.

SECTION A: Answer the TWO (2) compulsory questions.

Question 1

The benefits typically sought by adopting IFRS are to eliminate barriers to cross -border
investing; to increase the reliability, transparency and comparability of financial reports; to
increase market efficiency; and to decrease the cost of capital.
Evaluate the economic consequences of adopting IFRS in the area of market efficiency, liquidity,
cost of capital and earnings management.
(25 marks)
Question 2

Some standard setters and most academics suggested that accounting standards should be guided
by a set of precepts and principles spelled out in a “conceptual framework” document. As a
result, the joint conceptual framework project of the IASB and FASB under the Norwalk
Agreement was initiated in 2002.

Critically examine the relevance of joint conceptual framework and its current progress.
(25 marks)

SECTION B: Answer any TWO (2) questions

Question 3

The accounting process consisting of dealing with matters of judgement and of resolving
conflicts between competing approaches to the presentation of results of financial events and
transactions….this flexibility provides opportunities for manipulation, deceit and
misrepresentation. These activities practiced by the less scrupulous elements of the accounting
profession have come to be known as ‘creative accounting’.

Required:

(a) Justify why companies employ creative accounting techniques?

(b) Critically evaluate some of the techniques of creative accounting.

(c) Critically discuss the implications of creative accounting?

(25 marks)

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Question 4

(a) ‘Arguably Positive Accounting Theory (PAT) has been the most influential of all
accounting theories’. Evaluate this statement giving reasons why PAT has enjoyed such
success.
(12 marks)
(b) Critically Discuss three PAT based hypotheses
(13 marks)
Total: 25 marks

Question 5

“There are reasons why business entities have given a greater consideration to social and
environmental issues.” Evaluate why more companies are moving towards sustainability reporting.
(25 marks)

Question 6

IASB Framework for the Preparation and Presentation of Financial Statements explains that the
primary qualities of accounting information are relevance and reliability. To ensure the
usefulness of accounting information, information presented in financial statements must possess
these two qualities. However, preparers of financial statements may face a dilemma in satisfying
both criteria at once.

Critically evaluate why it is required to make trade-offs between these qualities and how these
qualities influence fair value accounting.
(25 marks)