The SEC Is Considering Proposals Regarding the Accounting Principles Companies

question 31

Essay

The SEC is considering proposals regarding the accounting principles companies may use for their financial statement filings. The SEC could require that U.S. companies use only U.S. GAAP in their financial statement filings. Alternatively, the SEC could allow, or even require, U.S. companies to use IFRS in their financial statement filings. Many issues and complexities surround the use of IFRS. The SEC must consider these and many other issues as it deliberates whether it should continue to require the use of U.S. GAAP or whether it should require the use of IFRS.
Required:
Identify and discuss three of the potential problems to be considered by the SEC in deliberating these proposals.

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Definitions:

Rights of Stockholders

Privileges and powers that come with owning shares of stock in a corporation, including voting rights and entitlement to dividends.

Account Receivable

Money owed to a company by its customers for goods or services already delivered but not yet paid for.

Accounting Standards

Guidelines and principles set by governing bodies that dictate how financial transactions are recorded and reported.

FASB

Refers to the Financial Accounting Standards Board, which is the organization responsible for establishing accounting and financial reporting standards in the United States.