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Chapter 1: Q2ISTQ (page 34)

The major key players on the international side are the:

(a) IASB and FASB. (c) SEC and FASB.

(b) IOSCO and the SEC. (d) IASB and IOSCO.

Short Answer

Expert verified

The correct option is(d) IASB and IOSCO.

Step by step solution

01

Definition of Accounting Standards

Accounting standards can be defined as the common principles and procedures that provide information regarding basic accounting practices. The standards promote comparability and transparency of the financial statement.

02

Explanation for correct options

Option (d) is correct because:

  1. IASB: International accounting standard board is the regulatory body that establishes standards for the accounting sector.
  2. IOSCO: International organization of the securities commission is the regulatory body that communicates with the different securities regulators and is also responsible for setting standards for securities sectors.
03

Explanation for incorrect options

  1. Option (a) is incorrect because FASB is responsible for the development of accounting standards in the U.S only.
  2. Option (b) is incorrect because SEC is responsible for controlling the security market of the U.S only.
  3. Option (c) is incorrect because both FASB and SEC are responsible for developing standards for the U.S only in their respective sectors.

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Most popular questions from this chapter

CA 1-4 (Financial Accounting) Omar Morena has recently completed his first year of studying accounting. His instructor for next semester has indicated that the primary focus will be the area of financial accounting.

Instructions

  1. Differentiate between financial accounting and managerial accounting.
  2. One part of financial accounting involves the preparation of financial statements. What are the financial statements most frequently provided?
  3. What is the difference between financial statements and financial reporting?

(GAAP 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. The objective of financial statements emphasizes a stewardship approach for reporting financial information.
  2. The purpose of the objective of financial reporting is to prepare a balance sheet, an income statement, a statement of cash flows, and a statement of owners’ or stockholders’ equity.
  3. Because they are generally shorter, FASB interpretations are subject to less due process compared to FASB standards.
  4. The objective of financial reporting uses an entity rather than a proprietary approach in determining what information to report.

Briefly explain the meaning of decision-usefulness in the context of financial reporting.

Economic consequences of accounting standard-setting means:

(a) standard-setters must give first priority to ensuring that companies do not suffer any adverse effect as a result of a new standard.

(b) standard-setters must ensure that no new costs are incurred when a new standard is issued.

(c) the objective of financial reporting should be politically motivated to ensure acceptance by the general public.

(d) accounting standards can have detrimental impacts on the wealth levels of the providers of financial information.

What are the sources of pressure that change and influence the development of GAAP?
See all solutions

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