{[ promptMessage ]}

Bookmark it

{[ promptMessage ]}

Chapter 1 - Solution Manual

Sources of nonauthoritative accounting guidance and

Info iconThis preview shows pages 2–4. Sign up to view the full content.

View Full Document Right Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: Sources of nonauthoritative accounting guidance and literature include, for example, the following: i. Practices that are widely recognized and prevalent either generally or in the industry ii. FASB Concepts Statements iii. American Institute of Certified Public Accountants (AICPA) Issues Papers iv. International Financial Reporting Standards of the International Accounting Standards Board Pronouncements of professional associations or regulatory agencies v. Technical Information Service Inquiries and Replies included in AICPA Technical Practice Aids vi. Accounting textbooks, handbooks, and articles Case 1-2 a. Inclusion or omission of information that materially affects net income harms particular stakeholders. Accountants must recognize that their decision to implement (or delay) reporting requirements will have immediate consequences for some stakeholders. b. Yes. Because the FASB standard results in a fairer presentation, it should be implemented as soon as possible--regardless of its impact on net income. c. The accountant's responsibility is to provide financial statements that present fairly the financial condition of the company. By advocating early implementation, Hoger fulfills this task. d. Potential lenders and investors, who read the financial statement and rely on its fair representation of the financial condition of the company, have the most to gain by early implementation. A stockholder who is considering the sale of stock may be harmed by early implementation that lowers net income (and may lower the value of the stock). Case 1-3 a. CAP. The Committee on Accounting Procedure, CAP, which was in existence from 1939 to 1959, was a natural outgrowth of AICPA (then AIA) committees, which were in existence during the period 1933 to 1938. The committee was formed in direct response to the criticism received by the accounting profession during the financial crisis of 1929 and the years thereafter. The authorization to issue pronouncements on matters of accounting principles and procedures was based on the belief that the AICPA had the responsibility to establish practices that would become generally accepted by the profession and by corporate management. As a general rule, the CAP directed its attention, almost entirely, to resolving specific accounting problems and topics rather than to the development of generally accepted accounting principles. The committee voted on the acceptance of specific Accounting Research Bulletins published by the committee. A two-thirds majority was required to issue a particular research bulletin. The 8 CAP did not have the authority to require acceptance of the issued bulletins by the general membership of the AICPA, but rather received its authority only upon general acceptance of the pronouncement by the members. That is, the bulletins set forth normative accounting procedures that "should be" followed by the accounting profession, but were not "required" to be followed....
View Full Document

{[ snackBarMessage ]}

Page2 / 27

Sources of nonauthoritative accounting guidance and...

This preview shows document pages 2 - 4. Sign up to view the full document.

View Full Document Right Arrow Icon bookmark
Ask a homework question - tutors are online