Question

14. Accounting principles are "generally accepted" only when a. an authoritative accounting rule-making body has established it in an official pronouncement. b. It has been accepted as appropriate because of its universal application. @both a and b. d. neither a norb. 15. A common set of accounting standards and procedures are called a. financial accounting standards. 6. generally accepted accounting principles. c. objectives of financial reporting. d. statements of financial accounting concepts. 16. Which of the following is a general limitation of "general purpose financial statements"? 6. General purpose financial statements may not be the most informative for a specific enterprise. b. General purpose financial statements are comparable. c. General purpose financial statements are assumed to present fairly the company's financial operations. d. None of the above. 17. What is the relationship between the Securities and Exchange Commission and accounting standard setting in the United States? a. The SEC requires all companies listed on an exchange to submit their financial statements to the SEC. b. The SEC coordinates with the AICPA in establishing accounting standards. The SEC has a mandate to establish accounting standards for enterprises under its Turisdiction. d. The SEC reviews financial statements for compliance. 18. What is due process in the context of standard setting at the FASB? a. FASB operates in full view of the public. b. Public hearings are held on proposed accounting standards. 5. Interested parties can make their views known. d. All of the above. 19. Which of the following organizations has been responsible for setting U.S. accounting standards? a. Accounting Principles Board. b. Committee on Accounting Procedure. c. Financial Accounting Standards Board. d. All of the above. 20. Why did the AICPA create the Accounting Principles Board? a. The SEC disbanded the previous standard setting organization. (b. The previous standard setting organization did not provide a structured set of accounting principles. c. No such organization existed in the past. d. None of the above. 21. The body that has the power to prescribe the accounting practices and standards to be employed by companies that fall under its jurisdiction is the a. FASB. b. AICPA. C. SEC. d. APB.

Answer 1

Answer 14

correct option (c) both a and b

Reason

Accounting principles are generally accepted only when an authoritative body of accounting establishes it in official pronouncement based on the fact that a particular accounting principle has been accepted appropriate  by the people universally as they hold good for most types of people /organisation / enterprise .Thus these both reasons make an accounting principle "generally accepted"

Answer 15

correct option (b) Generally accepted accounting principles or GAAP

Answer 16

correct option (a)

reason

General purpose financial statements have a limitation that they are not specific since  more specific financial reports like production flow processes and market analyzes are not included in a set of general-purpose financial statements.

Answer 17

correct option (c)

reason

The SEC requires each corporate entity under its jurisdiction to file a set of annual audited financial statements thus  the SEC has the mandate to establish accounting principles

Answer 18

correct option (d)

reason

As per "Financial Accounting Foundation’s Board of Trustees"

The Rules of Procedure describe the FASB’s operating procedures, including the due process activities that are to be open to public participation or observation to provide transparency into the standards-setting process. In particular, the Rules of Procedure describe:

• The organization in which the FASB operates
• The FASB mission, how the mission is accomplished, and related principles that guide the Board’s standards-setting activities
• The operating procedures of the FASB, including the responsibilities of the Chairman, the composition of the FASB technical staff, the role of advisory groups, the Emerging Issues Task Force, and public forums in our due process
• Our various forms of communications, including the form and content of Accounting Standards Updates, Exposure Drafts, and Concepts Statements
• Protocols for meetings of the FASB and voting requirements
• Rules governing public announcements and the kinds of information made broadly available to the public.

Thus since these steps are all involved in the procedure described thus all of the above is the correct option

answer 19

correct option (d)

Answer 20

correct option (b)

reason

The CAP was criticized for its piecemeal, “firefighting” approach to setting standards and its failure to reduce the number of alternative accounting procedures thus CAP was replaced by APB

Answer 21

correct option (c)