Accounting I

CA1-1 (FASB 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.GAAP is the term used to indicate the whole body of FASB authoritative literature.

True

2.Any company claiming compliance with GAAP must comply with most standards and interpretations but does not have to follow the disclosure requirements.

False. Any company claiming to comply with GAAP MUST comply with all standards and interpretations as well as disclosure requirements. They can not claim compliance if not complying with all.

3.The primary governmental body that has influence over the FASB is the SEC.

True

4.The FASB has a government mandate and therefore does not have to follow due process in issuing a standard.

False. FASB has a responsibility to the entire economic community and operates in full view of the public. There are several steps which the FASB follows when there is a topic of concern.

a) A topic is added to the agenda

b) Topic is researched

c) A Discussion Memo is issued

d) Public makes comments

e) Board evaluates research and public responses

f) Board issues an Exposure draft

g) Public comments on Exposure draft

h) Board evaluates responses to Exposure draft

i) Board issues final statement of Financial Accounting Standard

CA1-3 (Financial Reporting and Accounting Standards) Answer the following multiple-choice questions.

1. GAAP stands for:

(d) Generally accepted accounting principles.

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

(d) Research, discussion paper, exposure draft, standard.

3. GAAP is comprised of:

(d) Any accounting guidance included in the FASB Codification.

4. The authoritative status of the conceptual framework is as follows.

(a) It is used when there is no standard or interpretation related to the reporting issues under consideration.

5. The objective of financial reporting places most...