Jeshaun Charles Tutorial Assignment

Chapter 1 Financial Accounting and Accounting Standards

1. Identify the major financial statements and other means of financial reporting.

The major financial statements and other means of financial reporting are the balance
sheet, statement of cash flows and statement of stockholders' equity.

2. Explain how accounting assists in the efficient use of scarce resources.

To enable resource allocation to the most effective businesses, accounting supplies

managers, investors, and creditors with timely, pertinent, and reliable information.

3. Explain the need for Accounting Standards

The need for Accounting Standard is to ensure reliability, consistency, and transparency
of financial statements.

4. Identify the 3 organizations that are instrumental in the development of financial

accounting standards GAAP in the USA.

The three 3 organizations that are instrumental in the development of financial

accounting standards GAAP in the USA are the American Institute of Certified Public
Accountant (AICPA), the Securities and Exchange Commission (SEC) and the Financial
Accounting Standards Board (FASB).

5. Explain the steps involved in Due process used by the FASB typically to develop a
typical FASB Statement of Financial Accounting Standards.

The steps involved in Due process used by the FASB typically to develop a typical FASB
Statement of Financial Accounting Standards include Agenda, Discussion Memorandum,
Public Hearing, Exposure Draft and Final Standard. The agenda is where the topics for
standards setting are identified. Discussion Memorandum is where The FASB issues
initial research and analysis. After the Agenda and Discussion Memorandum a public
hearing is conducted. Then you have the Exposure Draft which the FASB issues also
known as the tentative draft. Finally, you have the Final Standard in which the FASB
evaluates and responds and issues the final standard.

6. How many members are required to support the passage of a new FASB Standard
Statement?

5 of the 7 members are required to support the passage of a new FASB Standard
Statement.
 7. What are some of the issues related to ethics and financial accounting?

Some of the issues related to ethics are falsifying reports, disclosure concerns and asset
misappropriation.

8. The organization whose purpose is to reach consensus on how to account for new and
unusual financial transactions that have potential for creating differing financial reporting
practices is the Emerging Issues Task Force (EITF).

9 and 10

9. The objective of financial reporting is to provide financial information about the entity
that is useful to individuals in making decisions in providing resources to that specific
entity.

10. The level of sophistication relating to financial reporting may vary but at the end of the
day it is still Financial Reports. Financial information should be able to be interpreted by
all parties involved whether they may have a background in accounting. So, with this it
should be acknowledged that any individual who is looking at financial information
should have at least some knowledge of what they are reading and would then be able to
review and analyze said information.