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Chapter 1: Question 11Q (page 22)

Distinguish between Opinions of the Accounting Principles Board and Accounting Standards Updates.

Short Answer

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Accounting Principle Board鈥檚 official pronouncements are called Accounting Principle Board Opinions and are considered to be based primarily on research studies and be guided by reason and analysis. On the other hand, Financial Accounting Standards Board (FASB) issues Accounting Standards Updates (ASU) to convey changes to the FASB Codification, consisting of changes to non-authoritative SEC content.

Step by step solution

01

Meaning of Accounting Standards

Accounting standardsare generally accepted accounting principles that provide the basis for accounting policies and for the preparation of financial statements.

The objective of these standards is to provide uniformity in financial reporting and to ensure consistency and comparability of the information provided by the business firms. It provides useful information to the users to interpret published reports.

02

Difference between Opinions of the Accounting Principles Board and Accounting Standards Updates

The Accounting Principle Board issued accounting Principle Board Opinions during 1959, replaced by Financial Accounting Standards Board (FASB) Statements, identified as accepted practice and comprise the requirements to be adhered to by all the business firms. At the same time, Accounting Standards Updates are pronouncements of the Financial Accounting Standards Board that are consolidated into the FASB codification and thus indicate the accounting profession鈥檚 authoritative pronouncements on accounting and reporting practices.

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Most popular questions from this chapter

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?

GAAP stands for:

  1. governmental auditing and accounting practices.
  2. generally accepted attest principles.
  3. government audit and attest policies.
  4. generally accepted accounting principles

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

CA1-7 WRITING (Need for GAAP) Some argue that having various organizations establish accounting principles is wasteful and inefficient. Rather than mandating accounting rules, each company could voluntarily disclose the type of information it considered important. In addition, if an investor wants additional information, the investor could contact the company and pay to receive the additional information desired.InstructionsComment on the appropriateness of this viewpoint.

Distinguish between FASB Accounting Standards Updates and FASB Statements of Financial Accounting Concepts.
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