Accounting Standard-Setting Bodies Quiz & Flashcards

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Questions and Answers

What is the primary purpose of accounting principles?

To ensure rigid and inflexible financial reporting

To provide uniformity in financial reporting (correct)

To facilitate individual creativity in financial reporting

To reduce the role of government bodies in accounting regulation

What is a characteristic of accounting principles?

They are universal and permanent

They are flexible and evolve over time (correct)

They are rigid and inflexible

They are developed by the government

What is the role of accounting standard-setting bodies?

To provide financial reporting services to companies

To regulate the stock market

To develop and enforce accounting principles (correct)

To audit financial statements

What is the relationship between accounting principles and guidelines?

Guidelines are a subset of accounting principles Signup and view all the answers

What is the significance of Generally Accepted Accounting Principles (GAAP)?

It is a mandatory framework for financial reporting in the US Signup and view all the answers

How do accounting principles influence financial statements?

They provide a framework for financial reporting, shaping the content and structure of financial statements Signup and view all the answers

What is the primary purpose of GAAP?

To standardize and regulate accounting definitions, assumptions, and methods Signup and view all the answers

Which of the following is a requirement for companies listed on major stock exchanges in Nigeria?

Filing financial statements reported according to GAAP Signup and view all the answers

What is the role of independent public accountants in the preparation of financial statements?

To audit financial statements and certify their compliance with GAAP Signup and view all the answers

What is the consequence of not following GAAP in financial statement preparation?

The company may be subject to penalties and sanctions Signup and view all the answers

What is the primary benefit of GAAP in financial reporting?

It increases the comparability and consistency of financial statements Signup and view all the answers

Who is responsible for certifying that financial statements have been prepared in accordance with GAAP?

Both the company's management and the independent public accountants Signup and view all the answers

What is the primary role of accounting standard-setting bodies?

Establishing Generally Accepted Accounting Principles Signup and view all the answers

Which of the following international organizations issues IFRS?

International Accounting Standards Board Signup and view all the answers

What is the primary function of professional bodies in the accounting profession?

Lobbying governments and providing a framework for self-regulation Signup and view all the answers

Which country has the Autorité des Normes Comptables (ANC) as its accounting standard-setting body?

France Signup and view all the answers

What is the name of the accounting standard-setting body in India?

National Advisory Committee on Accounting Standards Signup and view all the answers

What is the name of the international organization that issues IPSAS for Government/Public entities accounting?

International Public Sector Accounting Standards Board Signup and view all the answers

Study Notes

Accounting Principles and GAAP

Generally Accepted Accounting Principles (GAAP) serve as a common set of guidelines for companies in financial reporting.
Adherence to GAAP is mandatory for companies listed on major stock exchanges in Nigeria; they must file regular financial statements in accordance with it.
Accounting principles vary globally, leading to country-specific versions of GAAP.

Financial Statement Requirements

Companies distributing financial statements to the public must prepare them in accordance with GAAP.
Publicly traded companies are legally required to have their financial statements audited by independent public accountants.
Management and independent accountants must certify compliance with GAAP for the financial statements and related notes.

Importance and Features of GAAP

GAAP standardizes accounting definitions, assumptions, and methods, facilitating uniform understanding and practice in accounting.
Accounting principles are guidelines recognized by the profession, and the government usually accepts them.
Principles are flexible, reflecting their development from social sciences and evolving over time.

Definition and Influence

An accounting principle is a broadly accepted guideline in financial reporting.
The impact of accounting principles and guidelines is significant on the preparation and presentation of financial statements.

Accounting Standard-Setting Bodies

National and international organizations are tasked with establishing GAAP through statutory delegation.
Key international standard-setting bodies include:
- International Accounting Standards Board (IASB) - issues IFRS
- International Federation of Accountants - issues IPSAS for public entities
Notable national standard-setting bodies include:
- Australian Accounting Standards Board (Australia)
- CICA's Accounting Standards Board (Canada)
- Autorité des Normes Comptables (France)
- Accounting Standards Committee of Germany (Germany)
- National Advisory Committee on Accounting Standards (India)

Professional Bodies

Professional organizations advocate for their members and support self-regulation where legally permissible.

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Description

Test your understanding of accounting standard-setting bodies, their roles, and responsibilities. Learn about the different national and international organizations that set Generally Accepted Accounting Principles (GAAP) in various countries and jurisdictions.