Question

Question No. 1:                                    (LO1)                                                           

1. Explain the “due process” procedures followed by the FASB in developing a financial reporting standard.                                                                                                                     
2. What is meant by “economic Consequences” in accounting standard-setting?

                                                                                                                       

Explain in your own words the importance of Financial Accounting and Financial Reporting.                                                                  

Answer 1

Answer:

1 i).

The FASB utilize the accompanying fair due process procedures:

• Identifies a fiscal reporting issue:First, the Board recognizes a financial reporting issue that should be tended to, in view of requests/suggestions from partners, research by staff, Board individuals' interests, or different methods.
• Conduct of pre-plan Research:The Board votes on whether to add a task to the specialized plan, after conference with partners and others. The choice is dependent upon oversight by the FAF's Board of Trustees. The Board doles out the subject to its specialized staff, its in-house group of specialists, for research and investigation.
• Purposeful at public meeting: The Board examines the issue and the specialized staff's work at public meetings.
• Issue records for public Comment:The Board may distribute a Discussion Paper for public comment presenting the issues or concerns being tended to, alongside a scope of potential solutions.
• Host Public Hearing: he Board may give an Invitation to Comment, which may contain components of a Discussion Paper, a Preliminary Views record (talked about straightaway), or both. It regularly is given when the Board has not arrived at a reasonable consensus on an intricate or questionable issue. In cases managing especially perplexing or controversial issues, the Board may distribute a Preliminary Views record, planned to present at least one primer perspectives on the Board. This record additionally may contain an elective view that is shared by at least two Board individuals.
• Redeliberate Based on comments and research: After considering the feedback from the Discussion Paper, Preliminary Views, or Invitation to Comment, the Board gives an Exposure Draft of the proposed change. This is a first form of the genuine new or adjusted principle, and it is intended to request contribution from an expansive scope of partners. The Board sets an public comment period for the presentation draft.
• Issue last Standard:-Finally, the Board votes on the bookkeeping/accounting standard change. In the event that the change is affirmed, the Board issues an Accounting Standards Update (FASB) with codification.

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1 ii).

Economic results or economic consequences :

Economic outcomes or consequences are those financial substances which are identified with an exchange or transaction inside the current bookkeeping structure. These are shown by the Financial Accounting Standards Board (FASB) in tending to such issues as money related or fiscal instruments and reasonable worth bookkeeping/accounting, investment opportunities, and post-employment benefits rebuilding costs, and so on.

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1 iii).

The significance of financial Accounting and financial reporting:

• Financial Accounting assists with knowing consequence of the business regarding profit and misfortune by appropriate chronicle of different exchanges and applying bookkeeping ideas, conventions and standards. After information on results this data is passed on to different partners by financial reporting for additional analysis and decision makking.
• Utilization of financial Accounting and financial reporting is useful for administrative necessities. The associations are required to record fiscal summaries to ROC, Government Agencies. If there should arise an occurrence of listed organizations, quarterly just as yearly outcomes are required to be documented to stock exchanges and published.
• Financial Accounting and financial reporting is useful for course of action of fund for the business of the association. Regularly moneylenders request different monetary records like Income statement, Balance sheet and cash flow statements of earlier years while giving loans.
• The speculators/investors cause a picture of the business based on financial Accounting and financial reporting and they to dissect the performanace and position of the company.