Final Exam - Essay Practice Questions With 100% Correct Verified Solutions.
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Course
ESSAY.
Institution
ESSAY.
What is the difference between normative and positive theory? - correct answer Normative theory explain what should be and may/should happen in the future.
Positive theory explains what is. It is based on observation of real life scenarios and looks at historical data.
Explain how are ac...
What is the difference between normative and positive theory? - correct answer Normative theory
explain what should be and may/should happen in the future.
Positive theory explains what is. It is based on observation of real life scenarios and looks at historical
data.
Explain how are accounting standards enforced in the US? - correct answer Many acts and measures
are put in place to enforce accounting standards in the US. FASB, GASB, and GAAP are three boards that
establish accounting standards.
Identify and discuss the benefits that can be expected to be derived from the FASB's conceptual
framework study. - correct answer Increased efficiency in communication (internally and externally)
Allows users to better understand financial information
Influence of personal bias is increased
Provides a consideration of new alternatives to the fundamental basis of accounting
Assists in the development of accounting standards in the future
What are 3 different levels of FASB Conceptual Framework Pyramid, briefly explain about the
components of each level. - correct answer Objectives: (SFAC No. 8) purpose of financial reporting is
useful to current and potential investors and creditors.
Fundamentals: Elements and Qualitative Characteristics.
Rev.Exp.Gain.Loss.Asset.Liab.Equity.Relevance.Faithful.Representation
Implementation Guidelines: Assumptions, principles, and constraints. Economic Entity, going concern,
monetary unit periodicity. mearurement, rev. recog. full disclosure. cost, industry, practices.
Briefly Compare principles-based and rules-based approaches in accounting standard setting. - correct
answer Principle: better able to cope with speed of change of business environment, less voluminous,
encourages use of professional judgement with a focus on what is right, and seen as possibly
discouraging financial engineering.
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