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Chapter 1: Question 27Q (page 23)

What are some of the major challenges facing the accounting profession?

Short Answer

Expert verified

Some of the major challenges faced in the accounting profession include items such as nonfinancial measurement, forward-looking information, soft assets, and timeliness.

Step by step solution

01

Meaning of Accounting Profession

The accounting profession is defined as the duty of recording the transactions of a business in the books of account, which assists in maintaining the accounting records for business activities.

02

Major challenges faced in the accounting profession

Primary challenges facing the accounting profession refer to the following items:

  • Nonfinancial measurement: One of the difficulties faced by the accountants is how to report important key performance measurements like backlog information, customer satisfaction indexes, and reject rates on goods bought.
  • Forward-looking information: Another challenge is the ways to report more future-oriented information.
  • Soft assets: In what manner one should report on intangible assets, like marketing background, marketing supremacy, as well as well-trained employees.
  • Timeliness:Another difficulty faced is in what manner one should report immediate information

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Most popular questions from this chapter

Presented below are three models for setting GAAP.

  1. The purely political approach, where national legislative action decrees GAAP.
  2. The private, professional approach, where GAAP is set and enforced by private professional actions only.
  3. The public/ private mixed approach, where GAAP is basically set by private-sector bodies that behave as though they were public agencies and whose standards to a great extent are enforced through governmental agencies.

Instructions

  1. Which of these three models best describes standard-setting in the United States? Provide justification for your answer.
  2. Why do companies, financial analysts, labor unions, industry trade associations, and others take such an active interest in standard-setting?
  3. Cite an example of a group other than the FASB that attempts to establish accounting standards. Speculate as to why another group might wish to set its own standards.

What is the likely limitation of 鈥済eneral-purpose financial statements鈥�?

The major key players on the international side are the:

(a) IASB and FASB. (c) SEC and FASB.

(b) IOSCO and the SEC. (d) IASB and IOSCO.

What are the sources of pressure that change and influence the development of GAAP?

(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.
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