Concept for Analysis 1-9 (Essay) A press release announcing the appointment of t

Question

Concept for Analysis 1-9 (Essay) A press release announcing the appointment of the trustees of the new Financial Accounting Foundation stated that the Finandial Accounting Standards Board (to be appointed by the trustees) ". .. will become the established authority for setting accounting principles under which corporations report to the shareholders and others" (AICPA news release July 20, 1972) Identify the sponsoring organization of the FASB and the process by which the FASB arrives at a decision and issues an accounting standard. Indicate the major types of pronouncements issued by the FAS8 and the purposes of each of these pronouncements. Click if you would like to Show Work for this question: Open Show Work

Explanation / Answer

Ans 1: )

The Financial Accounting Standard Board (FASB) is an independent, non-profit, private organization established in 1973 under the sponsorship of the Financial Accounting Foundation (FAF). The FAF has the authority to select the members of the FASB and its Advisory Council; the FAF also supervises and monitors the FASB’s along with providing funds for its activities.

The FASB follows a systematic process for establishing a typical FASB Statement of Financial Accounting Standards which involves the following steps.

Ans 2: )

The three major types of pronouncements issued by the FASB are:

Standards and Interpretations: To provide guidance and to establish and improve Generally Accepted Accounting Principles (GAAP) within the United States.

Financial Accounting Concepts: These are used to guide the Board in developing sound accounting principles and provide the Board and its constituents with an understanding of the appropriate content and inherent limitations of financial reporting.

Technical Bulletins: These are intended to provide guidance on certain financial accounting and reporting problems on a timely basis, provide interpretive guidance and make minor amendments to existing standards.

Reference for the above has been obtained from www.fasb.org

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