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Chapter 1: Q9Q (page 22)

Question: What was the Committee on Accounting Procedure, and what were its accomplishments and failings?

Short Answer

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Answer

The committee on Accounting Procedure (CAP) was established by the American Institute of Certified Public Accountants (AICPA) through the persuasion of the Securities and Exchange Commission (SEC). It comprised 51 Certified Public Accountants (CPAs) and issued 51 accounting research bulletins. The bulletins coped with a varied accounting problems. However, this strategy failed to supply the required structured body of accounting principles.

Step by step solution

01

Meaning of Accounting Procedure

An accounting procedure is a structured method used for performing a function in the accounting department. Examples of accounting procedures include bills issued to customers

02

Accomplishments and failings of Committee on Accounting Procedure

Achievements of the Committee on Accounting Procedure (CAP) comprise bulletins comprise, these bulletins provided solutions to instant issues that arose and decreased the scope of alternative practices. The method of the Committee failed to present a well-defined and systemized body of accounting theory that was needed. However, the Committee was then substituted with the Accounting Principles Board (APB) in 1959.

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Most popular questions from this chapter

(Accounting Numbers and the Environment) Hardly a day goes by without an article appearing on the continu fallout from the financial crisis of 2008. An overheated real estate market, fueled by home purchase incentives, poor lend practices, and securitization through high-risk, mortgage-backed securities, led to a near collapse of global capital markets. a consequence, many have argued that if the financial institutions had been required to report their loans (and loan-bac: investments) at fair value instead of cost, large losses would have been reported earlier. This would have signaled regulator the problems in the mortgage markets and therefore minimized the losses to U.S. taxpayers.

Instructions

Explain how reported accounting numbers might affect an individual's perceptions and actions. Cite two examples.

The expectations gap is:

  1. What financial information management provides and what users want.
  2. What the public thinks accountants do and what accountants think they can do.
  3. What the governmental agencies want form standard-setting and what the standard-setters provide.
  4. What the users of financial statements want from the government and what is provided.

The authoritative status of the conceptual framework is as follows. (a) It is used when there is no standard or interpretation related to the reporting issues under consideration. (b) It is not as authoritative as a standard but takes precedence over any interpretation related to the reporting issue. (c) It takes precedence over all other authoritative literature. (d) It has no authoritative status.

ETHICS (Rule-Making Issues) When the FASB issues new pronouncements, the implementation date is usually 12 months from date of issuance, with early implementation encouraged. Karen Weller, controller, discusses with her financial vice president the need for early implementation of a rule that would result in a fairer presentation of the company鈥檚 financial condition and earnings. When the financial vice president determines that early implementation of the rule will adversely affect the reported net income for the year, he discourages Weller from implementing the rule until it is required.

Instructions:Answer the following questions.(d) Which stakeholders might be affected by the decision against early implementation?

How are FASB preliminary views and FASB exposure drafts related to FASB 鈥渟tatements鈥�?
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