FASB and Standard Setting

Question 1

How are amendments incorporated into FASB accounting standards codification?

Answer 1

Release of accounting standards update.

Question 2

Who writes GAAP?

Answer 2

FASB

Question 3

What is FASB?

Answer 3

Private sector body, in charge of implementing and writing GAAP.

Question 4

Purpose of Financial accounting?

Answer 4

To provide information to investors and creditors.

Question 5

Negative economic events (proposed accounting standards)

Answer 5

Argument when proposed accounting standards are discussed. Proposed standards might decrease earnings and therefore may affect ability of firm to raise capital.

Question 6

T/F Should new GAAP be neutral and and not favor any particular reporting objective?

Answer 6

TRUE

Question 7

What requirement best protects investors against fraud?

Answer 7

That firms need to be audited.

Question 8

T/F It is a violation of SEC regulations for publicly traded companies to depart from GAAP.

Answer 8

TRUE

Question 9

The operating procedure for issuing a new Financial Accounting Standards Board (FASB) statement

Answer 9

Majority vote, 4 out of the 7 members of FASB must vote in favor.