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Chapter 1: Question 2MCQ (page 21)

Accounting standard-setters use the following process in establishing accounting standards:

  1. Research, exposure draft, discussion paper, standard.
  2. Discussion paper, research, exposure draft, standard.
  3. Research, preliminary views, discussion paper, standard.
  4. Research, discussion paper, exposure draft, standard.

Short Answer

Expert verified

According to the accounting standard-setting process, the options (b), (c), and (d) are incorrect answers.

Thus, the correct option is (a).

Step by step solution

01

Explanation of Standard-Setting

The process of introducing a new standard to the standard board is known as the standard-setting. The setters need to do a thorough study of the consequences of the standard before starting it.

02

Accounting Standard Setting Process:

The accounting Standard-setting process is as follows:

  • Research: The research is done regarding identifying broad areas by the accounting standard board for the formulation of accounting standards.
  • ExposureDraft: After identifying the areas for the formulation of standards, preparation of the draft of the proposed accounting standard is done. It mostly contains the objectives, scope, definition, recognition, etc.
  • DiscussionPaper: After the draft is prepared, it is further circulated among ICAI, MCA, SEBI, CBDT, C&AG, public, etc., for obtaining their views on the proposed accounting standard.
  • Standard: After receiving the views from different bodies, modifications, if any, are made to the preliminary draft or else sent for approval, and a standard, is issued.

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The U.S. Securities and Exchange Commission (SEC) was created in 1934 and consists of five commissioners and a large professional staff. The SEC professional staff is organised into five divisions and several principal offices. The primary objective of the SEC is to support fair securities markets. The SEC also strives to foster enlightened stockholder participation in corporate decisions of publicly traded companies. The SEC has a significant presence in financial markets, the development of accounting practices, and corporation-shareholder relations, and has the power to exert influence on entities whose actions lie within the scope of its authority.

Instructions

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