ACC 321 Exam 1 Study Guide

ACC 321 Exam 1 Study Guide - ACC 321 Chapters 1 2 1 CHAPTER...

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1. CHAPTER 1 Why do we need accounting/financial reporting? Provide accurate information to the public. For managers, creditors, investors, unions. Provides us with a company history in terms of money. With accurate reports and information- companies can for example channel resources more effectively by assessing risk and return. Who is involved in the accounting process? U.S. 1. Securities and exchange commission (SEC): to help standardize and develop financial information to the people. More governmental regulation so we don’t have another crash. Administers the Securities Exchange Act Excercises oversight of over 12000 companies which fall under major exchanges (NYSE or NASDAQ) Relies on FASB for accounting standards SEC tells the private sector what to do 2. American institute of certified public accountants (AICPA) Appointed the Committee on Accounting Procedure (CAP): composed of practicing CPA’s; issues 51 Accounting Research Bulletins (ARB’s) these solutions failed to lead to accepted principals and therefore the Accounting Principals Board (APB) was created APB: established to advance the general principals, determined appropriate practices, and narrow the areas of difference and inconsistency . Issued 31 opinions, which were based on research and reason/analysis. o APB came under fire as they failed to act quickly and effectively. 3. Financial Accounting standards board (FASB) Took the place of the APB The Financial Accounting Foundation (FAF) selects FASB members To establish and improve standards of financial accounting and reporting for the guidance and education of the public (issuers, auditors, and users of financial info) Differences from the APB: o Smaller membership o Full time and well paid (APB was voluntary) o Greater Autonomy: its own entity that answers only to the Financial Accounting Foundation o Increased independence: must sever all ties from previous employment unlike APB
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o Broader Representation: Don’t have to be a CPA or member of the AICPA o Financial Accounting Standards Advisory Committee (FASAC) under the
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This note was uploaded on 11/15/2011 for the course ACC 321 taught by Professor Staff during the Fall '08 term at Miami University.

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ACC 321 Exam 1 Study Guide - ACC 321 Chapters 1 2 1 CHAPTER...

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