The Purpose of the FASAB Is to Develop and Issue

question 40

Multiple Choice

The purpose of the FASAB is to develop and issue federal accounting standards.
Which of the following is not accurate?

• A) FASAB has developed a conceptual framework to guide the Board in the development of new standards. The Concept Statements are authoritative and must be followed when reporting the financial results for federal government entities.
• B) The Board is considered "advisory" in that the standards must be approved by the three founding organizations Treasury, OMB, and GAO.
• C) The Concept Statements developed by the FASAB are not authoritative, but they identify user needs, the objectives of the financial reports, and definitions of the reporting entity and the elements of the financial statements.
• D) The standards called Statements of Federal Financial Accounting Standards are recognized as the highest level of authoritative standard in the AICPA's Code of Professional Conduct.

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Definitions:

Nominal Interest Rate

The interest rate in terms of nominal (not adjusted for purchasing power) dollars.

Coupon Rate

A bond’s interest payments per dollar of par value.

Expected Rate of Inflation

An estimate of the rate at which the general level of prices for goods and services will rise over a period.

Annual Real Rate

The annual rate of return on an investment, adjusted for inflation, indicating the real increase in the value of the investment over a year.