Role and Standard Setting Flashcards
What group currently writes GAAP?
The FASB (which is a private sector body, the 3rd which creates GAAP for businesses)
Who can enforce GAAP?
Not FASB (they help create it)
In reference to proposed accounting standards, the term “negative economic consequences” includes:
The inability to raise capital. I.E. New standard causes a firms earnings to fall -> lower earnings = hard to sell stock/get loans
_____ decisions are the primary focus of financial reporting.
Investment and credit decisions are the focus of financial reporting.
Which of the following statements best describes the operating procedure for issuing a new Financial Accounting Standards Board (FASB) statement?
A new statement is issued only after a majority vote by the members of the FASB. At least 4/7 members must vote in favor of a proposed FAS
It is a violation of SEC regulations for a publicly traded company to depart from _______.
GAAP