Question

questions 1-3 please

1. How did the APB pave the way for the FASB? 2. In what ways does the FASB differ most markedly from its two predecessors? 3. What is the weakness of Grady's approach in arriving at principles in ARS 7?

Answer 1

1. The purpose of the APB (TheTAccounting Principle Board) was to issue guidelines and rules on accounting principles. The APB was then replaced by the FASB ( Financial Accounting Standard Board). The main reasons for the replacement were, the need for an independent organization was considered, necessary, since there was a potential for the APB to be influence by its parent organization. The small amount of output generated by APB.

In response to considerable criticism of the exposure process, the APB initiated several important changes that have been carried forward to the Financial Accounting Standard Board. The APB was to work toward standard setting with a two pronged approach, The new FASB was to establish standards of financial accounting and reporting in the most efficient and complete manner.

2. FASB's biggest difference is its independence. The need for an independent organization was considered necessary., Since there was a potential for the APB to be influence by its parent organization. The FASB, unlike it's two predecessors, is indendent form and not part of the AICPA. All board members must maintain complete independence. This not only applies to other employment arrangements but also to investments. There must be no conflict between the members private interest and the public interest.

3. The major weakness of Grady's approach in arriving at principles in ARS is condified existing pronouncements and then tried to derive the profession's existing structure of Principles. The study blended inductive and deductive approaches it took the existing pronouncements and then attempted to reduce accounting principles from the body of accepted pronouncements.