Role and Standard Setting Flashcards

1
Q

What group currently writes GAAP?

A

The FASB (which is a private sector body, the 3rd which creates GAAP for businesses)

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2
Q

Who can enforce GAAP?

A

Not FASB (they help create it)

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3
Q

In reference to proposed accounting standards, the term “negative economic consequences” includes:

A

The inability to raise capital. I.E. New standard causes a firms earnings to fall -> lower earnings = hard to sell stock/get loans

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4
Q

_____ decisions are the primary focus of financial reporting.

A

Investment and credit decisions are the focus of financial reporting.

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5
Q

Which of the following statements best describes the operating procedure for issuing a new Financial Accounting Standards Board (FASB) statement?

A

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

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6
Q

It is a violation of SEC regulations for a publicly traded company to depart from _______.

A

GAAP

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