Development of Accounting Principles

question 95

Essay

Development of accounting principles.Presented below are three independent, unrelated statements regarding the formulation of generally accepted accounting principles. Each statement contains some incorrect or debatable statement(s).
Statement I
The users of financial accounting statements have coinciding and conflicting needs for statements of various types. To meet these needs, and to satisfy the financial reporting responsibility of management, accountants prepare different sets of financial statements for different users.
Statement II
The FASB should be responsive to the needs and viewpoints of the entire economic community, not just the public accounting profession. The FASB therefore will succeed because it will deal effectively with all interested groups.
Statement III
The Securities and Exchange Commission is very concerned about financial reporting and has formulated a committee called the Accounting Standards Executive Committee (AcSEC). This will provide input to the FASB. In addition, after each FASB Statement is issued, the AcSEC issues Statements of Position stating its position on the FASB statement.

Instructions

Evaluate each of the independent statements and identify the areas of fallacious reasoning in each. Explain why the reasoning is incorrect. Complete your discussion of each statement before proceeding to the next statement.

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Definitions:

Detritus Feeder

An organism that feeds on dead organic material, especially plant detritus, contributing to decomposition and nutrient cycling.

Decomposer

Organisms, usually bacteria and fungi, that break down dead or decaying organic matter, recycling nutrients in the ecosystem.

Food Chain

A series of organisms each dependent on the next as a source of food, representing the flow of energy and nutrients in an ecosystem.

Low-Quality Heat

Refers to thermal energy that is at a temperature unsuitable or too low to be used for work or energy production efficiently.