Podcast
Questions and Answers
What is the primary purpose of accounting principles?
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?
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?
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?
What is the relationship between accounting principles and guidelines?
What is the significance of Generally Accepted Accounting Principles (GAAP)?
What is the significance of Generally Accepted Accounting Principles (GAAP)?
How do accounting principles influence financial statements?
How do accounting principles influence financial statements?
What is the primary purpose of GAAP?
What is the primary purpose of GAAP?
Which of the following is a requirement for companies listed on major stock exchanges in Nigeria?
Which of the following is a requirement for companies listed on major stock exchanges in Nigeria?
What is the role of independent public accountants in the preparation of financial statements?
What is the role of independent public accountants in the preparation of financial statements?
What is the consequence of not following GAAP in financial statement preparation?
What is the consequence of not following GAAP in financial statement preparation?
What is the primary benefit of GAAP in financial reporting?
What is the primary benefit of GAAP in financial reporting?
Who is responsible for certifying that financial statements have been prepared in accordance with GAAP?
Who is responsible for certifying that financial statements have been prepared in accordance with GAAP?
What is the primary role of accounting standard-setting bodies?
What is the primary role of accounting standard-setting bodies?
Which of the following international organizations issues IFRS?
Which of the following international organizations issues IFRS?
What is the primary function of professional bodies in the accounting profession?
What is the primary function of professional bodies in the accounting profession?
Which country has the Autorité des Normes Comptables (ANC) as its accounting standard-setting body?
Which country has the Autorité des Normes Comptables (ANC) as its accounting standard-setting body?
What is the name of the accounting standard-setting body in India?
What is the name of the accounting standard-setting body in India?
What is the name of the international organization that issues IPSAS for Government/Public entities accounting?
What is the name of the international organization that issues IPSAS for Government/Public entities accounting?
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.