Exam 3: Development of Institutional Structure of Financial Accounting

In 1918, the American Institute of Accountants (AIA) worked with which of the following organizations to publish minimum standards for conducting a balance sheet audit?

The liability concept that restricts liability to each defendant's share of the damages based upon the judge or jury's assessment of their share of the damages is called:

The Trueblood Study Group formed the FASB and called for significant changes in the establishment of financial accounting standards.

The Litigation Reform Act of 1995 requires that an audit include procedures designed to guarantee that illegal acts that would materially affect financial statements will be detected.

The Committee on Accounting Procedures (CAP) used a formalized deductive approach to develop a comprehensive accounting theory.

Which of the following is true regarding the Committee on Accounting Procedures (CAP)?

The liability concept that can result in one party having to pay for more than its proportionate share of damages is called:

Most of the responsibility for establishing accounting principles has remained with the private sector rather than the SEC.

Compare and contrast the characteristics of the CAP, APB, and FASB.

FASB lost a significant amount of independence from the SEC due to Sarbanes-Oxley's passage.

Which of the following bodies was created to deal with municipal accounting issues?

Which of the following events resulted in shareholders' beginning to question whether accounting and reporting practices were adequate to assess investments?

Which state passed the law that first created the designation "Certified Public Accountant"?

Which of the following is true regarding the Emerging Issues Task Force (EITF)?

The Committee on Accounting Procedures (CAP) represented the profession's first sustained attempt to develop workable financial accounting rules.

In 1930, the AICPA began working with which of the following organizations to prepare "five broad accounting principles," one of the most important documents in the development of accounting rule making?

The AICPA has exclusive authority in the private sector for promulgating auditing rules.

How has the Government Accounting Standards Board (GASB) challenged the FASB's standard setting powers?

Discuss what is meant by "the liability crisis in public accounting." How did the Federal Litigation Reform Act of 1995 address this issue?

Which of the following professional associations has an interest in the accounting standard-setting process?