5 Questions
What is the primary responsibility of an accountant?
To act in the best interest of the public
What is the key principle of technical compliance in financial statements?
Generally accepted accounting principle (GAAP)
What is the term for representing the economic reality of an event in financial statements?
Economic substance
What is the primary purpose of full disclosure and transparency in financial statements?
To provide sufficient information to stakeholders
What should an accountant do in the event of a conflict between professional duties to their employer and clients?
Prioritize the duties to the public
Study Notes
Ethical and Professional Issues in Complying with Accounting Standards
- Accountants have a primary responsibility to act in the best interest of the public.
- Accountants also have professional duties to their employer and clients, but in case of conflict, public interest takes precedence.
Criteria for Financial Statements (FS)
- Technical compliance: FS must comply with Generally Accepted Accounting Principles (GAAP).
- Economic substance: FS must accurately represent the economic substance of the event that has occurred.
- Full disclosure and transparency: FS must provide sufficient disclosure.
This quiz covers ethical and professional issues in accounting, including accountants' duties to the public and clients, and complying with accounting standards such as GAAP. It also touches on the criteria for financial statements, including technical compliance and economic substance.
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