1 | Page
FSA Level 1 Exam Questions and Correct
Answers
Financial Accounting Standards Board (FASB) creation Ans: —
1973
1975-2015 Intangible Assets Ans: — 17-84%
Relation between Sustainability criteria and corporate financial
performance Ans: — 90% non-negative
Amount of institutional investors using sustainability information
in decisions Ans: — 82% - 2014 PwC
PRI 2017 Ans: — 2500 signatories, $60 trillion
PCAOB (Public Company Accounting Oversight Board) Ans: — The
PCAOB protects investors and the public interest by working
toward useful independent audit reports and by establishing
standards for audits and auditors. The PCAOB has oversight over
the external audit profession. The SEC regularly communicates
with and provides feedback to the PCAOB, the FASB, the
International Accounting Standards Board ("IASB"), and the
American Institute of Certified Public Accountants ("AICPA")
regarding accounting standards
Trueblood Committee Ans: — to propose the objectives of
financial reporting, based on the underlying belief that identifying
objectives would help improve financial reporting. The Trueblood
Committee's report seconded the decision-usefulness objective
that ASOBAT had articulated, with a strong emphasis on future
cash flows to investors. The Trueblood Committee stated that the
economic and social goals of business are equally important. 44
The committee pointed to pollution as an example of "enterprise
activities which require sacrifices from those who do not
benefit."45 In other words, some corporate activities impose
externalities on the rest of society. Therefore, one objective of
financial statements is "to report on those activities of the report
affecting society which can be determined and described and
© 2025 All rights reserved
, 2 | Page
measured and which are important to the role of the enterprise in
its social environment."46
Wheat Committee Ans: — charged with identifying ways to
improve the establishment of accounting standards. In 1972, it
proposed the formation of the Financial Accounting Standards
Board ("FASB"). The FASB was to be an independent organization
dedicated to the development of financial accounting standards,
unlike the APB, which was made up of individuals serving part-
time. The AICPA adopted the Wheat Committee's recommendation,
and in July 1973, the FASB began operations and replaced the APB
with the SEC's approva
Characteristics of Useful Financial Information Ans: — •
Relevance, which explicitly recognizes the importance of
materiality
• Faithful representation, which more specifically means that the
information is complete, neutral, and free from error. To enhance
the relevance and faithful representation of the information, it
should also be:
• Comparable;
• Verifiable;
• Timely;
• Understandable
Determining if a trend has a material affect Ans: — (1) Is the
known trend, demand, commitment, event, or uncertainty likely to
come to fruition? If management determines that it is not
reasonably likely to occur, no disclosure is required. (2) If
management cannot make that determination, it must evaluate
objectively the consequences of the known trend, demand,
commitment, event, or uncertainty, on the assumption that it will
come to fruition. Disclosure is then required unless management
determines that a material effect on the registrant's financial
condition or results of operations is not reasonably likely to occur
SEC Climate Change Guidance Ans: — 1. Impact of legislation and
regulation
© 2025 All rights reserved
FSA Level 1 Exam Questions and Correct
Answers
Financial Accounting Standards Board (FASB) creation Ans: —
1973
1975-2015 Intangible Assets Ans: — 17-84%
Relation between Sustainability criteria and corporate financial
performance Ans: — 90% non-negative
Amount of institutional investors using sustainability information
in decisions Ans: — 82% - 2014 PwC
PRI 2017 Ans: — 2500 signatories, $60 trillion
PCAOB (Public Company Accounting Oversight Board) Ans: — The
PCAOB protects investors and the public interest by working
toward useful independent audit reports and by establishing
standards for audits and auditors. The PCAOB has oversight over
the external audit profession. The SEC regularly communicates
with and provides feedback to the PCAOB, the FASB, the
International Accounting Standards Board ("IASB"), and the
American Institute of Certified Public Accountants ("AICPA")
regarding accounting standards
Trueblood Committee Ans: — to propose the objectives of
financial reporting, based on the underlying belief that identifying
objectives would help improve financial reporting. The Trueblood
Committee's report seconded the decision-usefulness objective
that ASOBAT had articulated, with a strong emphasis on future
cash flows to investors. The Trueblood Committee stated that the
economic and social goals of business are equally important. 44
The committee pointed to pollution as an example of "enterprise
activities which require sacrifices from those who do not
benefit."45 In other words, some corporate activities impose
externalities on the rest of society. Therefore, one objective of
financial statements is "to report on those activities of the report
affecting society which can be determined and described and
© 2025 All rights reserved
, 2 | Page
measured and which are important to the role of the enterprise in
its social environment."46
Wheat Committee Ans: — charged with identifying ways to
improve the establishment of accounting standards. In 1972, it
proposed the formation of the Financial Accounting Standards
Board ("FASB"). The FASB was to be an independent organization
dedicated to the development of financial accounting standards,
unlike the APB, which was made up of individuals serving part-
time. The AICPA adopted the Wheat Committee's recommendation,
and in July 1973, the FASB began operations and replaced the APB
with the SEC's approva
Characteristics of Useful Financial Information Ans: — •
Relevance, which explicitly recognizes the importance of
materiality
• Faithful representation, which more specifically means that the
information is complete, neutral, and free from error. To enhance
the relevance and faithful representation of the information, it
should also be:
• Comparable;
• Verifiable;
• Timely;
• Understandable
Determining if a trend has a material affect Ans: — (1) Is the
known trend, demand, commitment, event, or uncertainty likely to
come to fruition? If management determines that it is not
reasonably likely to occur, no disclosure is required. (2) If
management cannot make that determination, it must evaluate
objectively the consequences of the known trend, demand,
commitment, event, or uncertainty, on the assumption that it will
come to fruition. Disclosure is then required unless management
determines that a material effect on the registrant's financial
condition or results of operations is not reasonably likely to occur
SEC Climate Change Guidance Ans: — 1. Impact of legislation and
regulation
© 2025 All rights reserved
