/*! This file is auto-generated */ .wp-block-button__link{color:#fff;background-color:#32373c;border-radius:9999px;box-shadow:none;text-decoration:none;padding:calc(.667em + 2px) calc(1.333em + 2px);font-size:1.125em}.wp-block-file__button{background:#32373c;color:#fff;text-decoration:none} Q9CA (FASB Role in Rule-making) A pre... [FREE SOLUTION] | 91影视

91影视

Log out

Learning Materials

Features

Discover

Chapter 1: Q9CA (page 25)

(FASB Role in Rule-making) A press release announcing the appointment of the trustees of the new Financial Accounting Foundation stated that the Financial Accounting Standards Board (to be appointed by the trustees)鈥濃�ill become the established authority for setting accounting principles under which corporations report to the shareholders and others鈥� (AICPA news release July 20,1972).

Instructions

  1. Identify the sponsoring organization of the FASB and the process by which the FASB arrives at a decision and issues an accounting standard.
  2. Indicate the major types of pronouncements issued by the FASB and the purpose of each of these pronouncements.

Short Answer

Expert verified
  1. The sponsoring organization of the FASB is the Financial Accounting Foundation (FAF). A due process is followed in creating a Financial Accounting Standards Board (FASB) Statement of Financial Accounting Standards.
  2. The major types of pronouncements issued by the FASB include accounting standard updates, technical bulletins, financial accounting concepts, various statements, and bulletins that establish Generally Accepted Accounting Principles (GAAP).

Step by step solution

01

Step by Step SolutionStep 1: Meaning of Financial Accounting Standards Board (FASB)

Financial Accounting Standards Board (FASB) is the one that establishes accounting rules for government and non-government firms as well as non-profits entities in the United States.

02

Sponsoring the organization of FASB and the process used by them for decision-making and issuing an accounting standard

The Financial Accounting Foundation is regarded as the sponsoring organization of the Financial Accounting Standards Board (FASB). The Financial Accounting Foundation (FAF) chooses the members of the Financial Accounting Standards Board (FASB) as well as it is Advisory Council, finances their activities, and supervises the activities of the Financial Accounting Standards Board (FASB).

Due process is applied for arriving at a decision.

  • A project is recognized and allocated on the Board鈥檚 agenda.
  • A task force of experts from different sectors is assembled for explaining issues and alternatives associated with the topic.
  • Research and analysis are being performed with the help of the FASB technical staff.
  • A preliminary views document is outlined and issued.
  • A general hearing is usually conducted.
  • The board inspects and assesses the response of the public.
  • The board discusses the problems and arranges an exposure draft for release.
  • After the completion of at least 30 days exposure period of public response, the Board judges the responses collected.
  • A committee then examines the exposure draft associated with the public responses, reconsiders its position, and amends the draft required, if any.
  • The full Board provides the re-examined draft final conclusion and votes on the issuance of a standards statement. It needs 5 to 7 members to pass.
03

Major types of pronouncements issued by FASB and the purposes of each.

The two major types of pronouncements issued by the FASB includes Accounting Standard Updates and Financial Accounting Concepts.

Accounting Standards Updates: The accounting pronouncements are issued by FASB with the help of the Accounting Standard Updates. The purpose of Accounting Standard Updates is to alter the Accounting Standards Codification, which shows the origin of authoritative accounting standards other than standards issued by the SEC.

Financial Accounting Concepts: It establishes fundamental objectives and concepts used by FASB in advancing future standards of financial reporting and accounting.

Unlock Step-by-Step Solutions & Ace Your Exams!

  • Full Textbook Solutions

    Get detailed explanations and key concepts

  • Unlimited Al creation

    Al flashcards, explanations, exams and more...

  • Ads-free access

    To over 500 millions flashcards

  • Money-back guarantee

    We refund you if you fail your exam.

Over 30 million students worldwide already upgrade their learning with 91影视!

One App. One Place for Learning.

All the tools & learning materials you need for study success - in one app.

Get started for free

Most popular questions from this chapter

Differentiate between 鈥渇inancial statements鈥� and 鈥渇inancial reporting.鈥�

Of what value is a common set of standards in financial accounting and reporting?

(GAAP and Standard-Setting) Presented below are four statements which you are to identify as true or false. If false, explain why the statement is false.

  1. The objective of financial statements emphasizes a stewardship approach for reporting financial information.
  2. The purpose of the objective of financial reporting is to prepare a balance sheet, an income statement, a statement of cash flows, and a statement of owners鈥� or stockholders鈥� equity.
  3. Because they are generally shorter, FASB interpretations are subject to less due process compared to FASB standards.
  4. The objective of financial reporting uses an entity rather than a proprietary approach in determining what information to report.

The following comments were made at an Annual Conference of the Financial Executives Institutes (FEI). There is an irreversible movement toward the harmonization of financial reporting throughout the world. The international capital markets require an end to:

  1. The confusion caused by international companies announcing different results depending on the set of accounting standards applied.
  2. Companies in some countries obtaining unfair commercial advantages from the use of particular national accounting standards.
  3. The complications in negotiating commercial arrangements for international joint ventures caused by different accounting requirements.
  4. The inefficiency of international companies having to understand and use a myriad of different accounting standards depending on the countries in which they operate and the countries in which they raise capital and debt. Executive talent is wasted on keeping up to date with numerous sets of accounting standards and the never-ending changes to them.
  5. The inefficiency of investment managers, bankers, and financial analysts as they seek to compare financial reporting drawn up in accordance with different sets of accounting standards.

Instructions

  1. What is the International Accounting Standards Board?
  2. What stakeholders might benefit from the use of International Accounting Standards?
  3. What do you believe are some of the major obstacles to convergence?

The objective of financial reporting places most emphasis on:

  1. Reporting to capital providers.
  2. Reporting on stewardship
  3. Providing specific guidance related to specific needs.
  4. Providing information to individuals who are experts in the field.
See all solutions

Recommended explanations on Business Studies Textbooks

Financial Performance

Read Explanation

Business Case Studies

Read Explanation

Business Data Analytics

Read Explanation

Finance Literacy (Business Studies)

Read Explanation

Sales in Business

Read Explanation

Public Relations Business Studies

Read Explanation
View all explanations

What do you think about this solution?

We value your feedback to improve our textbook solutions.

Study anywhere. Anytime. Across all devices.