Question
9.
10.
11.
12.
13.
E1-2 (book/static) Alicia O'Malley, a sociology major, is considering changing her major to accounting. Alicia is having some doubts because she fears that accounting and financial reporting are only concerned with numbers and are Question Help * isolated from society. Requirement Convince Alicia to major in accounting by explaining how accounting interacts with its environment. In your answer, include a discussion of proactive and reactive factors. Accounting and financial reporting are far fro isolated from society. Accounting and financial reporting interact with environmental factors such as legal, economic, political, and social , that shape and infiuence the financial reporting process. The information needs of financial statement users change as business evolves Financial accounting interacts with its environment in both a reactive and proactive fashion In a reactive fashion, financial accounting reacts to pressure (lobbying) from various groups and changes in its environment. Accounting theories and procedures evolve to meet the dynamic changes and demands from the environment. The J is also a political process that is heavily that is used by nfluenced by the various groups within the reporting environment. Financial accounting is also proactive. That is, it can organizations and individuals to reshape the economy development of accounting standards dissemination of financial information preparation of financial statements Click to select your answerls) and then click Check Answer Clear All All parts showing 249 AM E
Explanation / Answer
9 E1-2 The development of accounting standards is also a political process. That it can change or influence its environment by providing feedback information that is used by organizations and individuals to reshape the economy. 10 E1-3 A. The SEC is currently delibrating if IFRS will be required to be used by U.S. companies. B. The SEC permits the use of IFRS based financial statements by international companies with share trading on U.S. stock exchange. D. US companies operate subsidiaries outside of the US. Many of these report under IFRS in their home countries. 11 E1-4 1934 with the 1934 Securities exchange act 12 E1-5 Key characteristics of rule based standards 1. Contain numerous bright line test. 2. Contain detailed application guidance. 3. Do not rely on extensive use of professional judgement. 4. Involve few, if any , exceptions. 5. Provide insufficient guidance to implement the standard. 6. Result in inconsistencies between standards.
