Intermediate Accounting, 7th edition, Solution Manual Essay

6720 Words Feb 14th, 2014 27 Pages
Chapter 1

Environment and Theoretical Structure of
Financial Accounting

AACSB assurance of learning standards in accounting and business education require documentation of outcomes assessment. Although schools, departments, and faculty may approach assessment and its documentation differently, one approach is to provide specific questions on exams that become the basis for assessment. To aid faculty in this endeavor, we have labeled each question, exercise and problem in Intermediate Accounting, 7e with the following AACSB learning skills: Questions

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Question 1–10
On July 30, 2002, President Bush signed into law the Sarbanes-Oxley Act of 2002. The most dramatic change to federal securities laws since the 1930s, the Act radically redesigns federal regulation of public company corporate governance and reporting obligations. It also significantly tightens accountability standards for directors and officers, auditors, securities analysts, and legal counsel. Student opinions as to the relative importance of the key provisions of the act will vary.
Key provisions in the order of presentation in the text are:
 Creation of an Oversight Board
 Corporate executive accountability
 Nonaudit services
 Retention of work papers
 Auditor rotation
 Conflicts of interest
 Hiring of auditor
 Internal control

© The McGraw-Hill Companies, Inc., 2013
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Intermediate Accounting 7/e

Answers to Questions (continued)
Question 1–11
New accounting standards, or changes in standards, can have significant differential effects on companies, investors and creditors, and other interest groups by causing redistribution of wealth.
There also is the possibility that standards could harm the economy as a whole by causing companies to change their behavior.

Question 1–12
The FASB undertakes a series of elaborate information gathering steps before issuing an accounting standard to determine consensus as to the preferred method of accounting, as well as to anticipate adverse economic consequences.

Question

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