Posted: March 2nd, 2022

1Development of accounting principles

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1Development of accounting principles.
Presented below are two independent, unrelated statements regarding the formulation of generally accepted accounting principles.  Each statement contains some incorrect or debatable statement(s).
Statement I
The users of financial accounting statements have coinciding and conflicting needs for statements of various types. To meet these needs, and to satisfy the financial reporting responsibility of management, accountants prepare different sets of financial statements for different users.
Statement II
The FASB should be responsive to the needs and viewpoints of the entire economic community, not just the public accounting profession. The FASB therefore will succeed because it will deal effectively with all interested groups.
Instructions
Evaluate each of the independent statements and identify the areas of fallacious reasoning in each. Explain why the reasoning is incorrect. Complete your discussion of each statement before proceeding to the next statement.
2Evolution of a statement of financial accounting standards.
In establishing financial accounting standards, two basic premises of the FASB are (1) The FASB should be responsive to the needs and viewpoints of the entire economic community, not just the accounting profession. (2) It should operate in full view of the public through a “due process” system that gives interested persons ample opportunity to make their views known. To ensure achievement of these goals, what steps does the FASB follow in the development of a typical FASB standard?

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