FAC 1601 COMPREHENSIVE EXAM SCRIPT COMPLETE QUESTIONS VERIFIED SOLUTIONS
Question:
What are the four major elements of financial accounting?
Answer:
Economic entities User groups Environment Financial information
Question:
What are the four basic financial statements?
Answer:
1. Balance Sheet 2. Income Statement 3. Statement of Stockholder's Equity 4. Statement of Cash
Flows
Question:
general-purpose financial statements.
Answer:
provide financial reporting information to a wide variety of users
Question:
Financial Accounting Standards Board (FASB).
Answer:
the primary accounting standard-setting body in the US
Question:
, What is the 7 step process to issue a final standard?
Answer:
1. Identify the issue 2. Decision to pursue issue 3. Public meeting 4. Exposure draft 5 public round
tables 6. Re-deliberation 7. Public of the final standard
Question:
When did the financial reporting standards setting begin in the United States?
Answer:
1934 with the 1934 Securities exchange act
Question:
Who had the initial authority to set accounting standards?
Answer:
The SEC initially had the power to communicate accounting standards that all publicly-traded firms
must follow. However, this power was delegated to the private sector
Question:
Which organizations were delegated the authority to set standards. Comment on the types of
standards issued and concerns with the standard-setting process under each organization.
Answer:
The committee on accounting procedures (CAP) was formed in 1938, the organizations purpose was
to reduce the number of accounting methods used in practice. During its tenure, it produced 51
standards referred to as Accounting Research Bulletins (ARB). The organization accomplished its
purpose and was replaced in 1959 by the Accounting principles Board (APB)
Question:
The APBs purpose was to issue the pronouncements on accounting standards needed to meet
existing and emerging problems in financial reporting. The pronouncements of the APB were
known as opinions. The APB was criticized for two reasons:.
Question:
What are the four major elements of financial accounting?
Answer:
Economic entities User groups Environment Financial information
Question:
What are the four basic financial statements?
Answer:
1. Balance Sheet 2. Income Statement 3. Statement of Stockholder's Equity 4. Statement of Cash
Flows
Question:
general-purpose financial statements.
Answer:
provide financial reporting information to a wide variety of users
Question:
Financial Accounting Standards Board (FASB).
Answer:
the primary accounting standard-setting body in the US
Question:
, What is the 7 step process to issue a final standard?
Answer:
1. Identify the issue 2. Decision to pursue issue 3. Public meeting 4. Exposure draft 5 public round
tables 6. Re-deliberation 7. Public of the final standard
Question:
When did the financial reporting standards setting begin in the United States?
Answer:
1934 with the 1934 Securities exchange act
Question:
Who had the initial authority to set accounting standards?
Answer:
The SEC initially had the power to communicate accounting standards that all publicly-traded firms
must follow. However, this power was delegated to the private sector
Question:
Which organizations were delegated the authority to set standards. Comment on the types of
standards issued and concerns with the standard-setting process under each organization.
Answer:
The committee on accounting procedures (CAP) was formed in 1938, the organizations purpose was
to reduce the number of accounting methods used in practice. During its tenure, it produced 51
standards referred to as Accounting Research Bulletins (ARB). The organization accomplished its
purpose and was replaced in 1959 by the Accounting principles Board (APB)
Question:
The APBs purpose was to issue the pronouncements on accounting standards needed to meet
existing and emerging problems in financial reporting. The pronouncements of the APB were
known as opinions. The APB was criticized for two reasons:.
