Exam 3: Development of Institutional Structure of Financial Accounting

The Securities Act of 1933 and the Securities and Exchange Act of 1934 were the first national securities legislations in the United States.

The AICPA has developed an electronic filing of financial data called EDGAR.

The accounting profession has been regulated by Congress since the 1880s when it became clear that accounting was an important instrument in America for conducting business.

How and why did the AICPA's role change under Sarbanes-Oxley?

The SEC was created by Congress to replace the AICPA's standard-setting group.

The accounting standard-setting process begins with which of the following steps?

Describe the controversy surrounding the issuance of APB Opinion No. 2, which addressed the investment tax credit? How did the APB resolve this controversy and what was the resulting effect on the board's authority?

An annual report to stockholders prepared using FASB accounting standards generally has more disclosure of nonfinancial statement information than does the typical annual report filed with the SEC.

What was the purpose of APB Statement 4, Basic Concepts and Accounting Principles Underlying Financial Statements of Business Enterprises?

APB Opinions were originally expected to be based on in-depth research studies.

Explain how Sarbanes-Oxley of 2002 significantly changes how the FASB will operate in the future.

Which of the following are true regarding the Financial Accounting Standards Board (FASB)?

The SEC is legally empowered to regulate accounting principles.

FASB statements have resulted in a more conservative balance sheet and immediate recognition of events on the income statement.

Which of the following is a true statement?

The Federal Litigation Reform Act of 1995 replaced the previous proportionate liability requirement with joint and several liability for damages suffered by third parties who rely on the financial statement of firms attested to by CPAs.

How might the AICPA regain some of the power it has lost over the years? Are there any disadvantages to these proposals?

Why did accounting and reporting practices in the U.S. prior to 1930 not meet the needs of shareholder investors?

A problem with the increased importance of the management consulting function in auditing firms is the possible erosion of the integrity of the auditing function.

Which of the following was a controversial issue faced by the Accounting Principles Board (APB)?