Quiz 1 FAR PRACTICE TEST QUESTIONS 2026-2027 NEWEST EXAM |
ALL QUESTIONS AND CORRECT ANSWERS WITH EXPLANATIONS |
GRADED A+ | VERIFIED ANSWERS | JUST RELEASED VERSION 1
What does FASB stand for?
Financial Accounting Standards Board
What does SEC stand for?
Securities and Exchange Commission
What does AICPA stand for?
American Institute of Certified Public Accountants
What does PCC stand for?
Private Company Council
The FASB operated with seven board members from its inception in
1973 until 2008 when the board was reduced to members.
5; the board membership increased back to seven in early 2011
,AICPA timeline
AICPA ---> CAP 1939 ---> APB 1959 ---> Wheat Committee 1971 ---> FASB
1973
(The FASB is not affiliated with the AICPA)
What are the three parts of the current accounting standard setting
mechanism in the united states?
FAF, FASB, and FASAC
What is the role of the Financial Accounting Foundation (FAF)
Appoints member of FASB, ensures adequate funding for the FASB,
Exercises oversight over the FASB.
What is the role of the FASB?
To establish financial accounting standards, GAAP, for business entities.
The FASB is an independent body, subject only to the FAF.
What is the role of the Financial Accounting Standards Advisory
Council (FASAC)?
To provide guidance on major policy issues, project priorities, and the
formation of task forces.
,Mission of the FASB
1. Improve the usefulness of financial reporting
2. Maintain current accounting standards
3. Promptly address deficiencies in accounting standards
4. Promote international convergence of accounting standards
5. Improve the common understanding of the nature and
purposes of information in financial reports.
How long is the term of a FASB member?
Renewable for one additional term and staggered 5 year terms.
In promulgating GAAP, the FASB applies the following principles:
-accounting standards should be unbiased
-the needs and views of the economic community should be considered
-the process of developing standards should be open to the public
and allow dues process to provide opportunity for interested parties
to make their views known
-the benefits of accounting standards should exceed their cost.
What is the standard setting process?
Project is added to the Agenda ---> Conduct research/ issue discussion
memorandum ---> public hearing ---> issue exposure draft ---> modify
exposure draft ---> finalize and issue ASU
, What is authoritative GAAP?
-The ASC (Codification) which is composed of pronouncements issued by
FASB, APB, and CAP
-SEC Guidance
What is the codification?
a searchable database that houses GAAP
What is non authoritative GAAP?
Widely recognized and prevalent practices, FASB Concept statements,
AICPA issued papers, IFRS
What is the objective of financial accounting?
To aid the decisions of External users
What is the emerging issues task force (EITF)?
Group formed to consider emerging reporting issues and to
accelerate the process of establishing rulings on such issues. Helps
reduce diversity in the implementation of GAAP.
Firm managers are referred to as
Preparers or preparer firms
ALL QUESTIONS AND CORRECT ANSWERS WITH EXPLANATIONS |
GRADED A+ | VERIFIED ANSWERS | JUST RELEASED VERSION 1
What does FASB stand for?
Financial Accounting Standards Board
What does SEC stand for?
Securities and Exchange Commission
What does AICPA stand for?
American Institute of Certified Public Accountants
What does PCC stand for?
Private Company Council
The FASB operated with seven board members from its inception in
1973 until 2008 when the board was reduced to members.
5; the board membership increased back to seven in early 2011
,AICPA timeline
AICPA ---> CAP 1939 ---> APB 1959 ---> Wheat Committee 1971 ---> FASB
1973
(The FASB is not affiliated with the AICPA)
What are the three parts of the current accounting standard setting
mechanism in the united states?
FAF, FASB, and FASAC
What is the role of the Financial Accounting Foundation (FAF)
Appoints member of FASB, ensures adequate funding for the FASB,
Exercises oversight over the FASB.
What is the role of the FASB?
To establish financial accounting standards, GAAP, for business entities.
The FASB is an independent body, subject only to the FAF.
What is the role of the Financial Accounting Standards Advisory
Council (FASAC)?
To provide guidance on major policy issues, project priorities, and the
formation of task forces.
,Mission of the FASB
1. Improve the usefulness of financial reporting
2. Maintain current accounting standards
3. Promptly address deficiencies in accounting standards
4. Promote international convergence of accounting standards
5. Improve the common understanding of the nature and
purposes of information in financial reports.
How long is the term of a FASB member?
Renewable for one additional term and staggered 5 year terms.
In promulgating GAAP, the FASB applies the following principles:
-accounting standards should be unbiased
-the needs and views of the economic community should be considered
-the process of developing standards should be open to the public
and allow dues process to provide opportunity for interested parties
to make their views known
-the benefits of accounting standards should exceed their cost.
What is the standard setting process?
Project is added to the Agenda ---> Conduct research/ issue discussion
memorandum ---> public hearing ---> issue exposure draft ---> modify
exposure draft ---> finalize and issue ASU
, What is authoritative GAAP?
-The ASC (Codification) which is composed of pronouncements issued by
FASB, APB, and CAP
-SEC Guidance
What is the codification?
a searchable database that houses GAAP
What is non authoritative GAAP?
Widely recognized and prevalent practices, FASB Concept statements,
AICPA issued papers, IFRS
What is the objective of financial accounting?
To aid the decisions of External users
What is the emerging issues task force (EITF)?
Group formed to consider emerging reporting issues and to
accelerate the process of establishing rulings on such issues. Helps
reduce diversity in the implementation of GAAP.
Firm managers are referred to as
Preparers or preparer firms
