Question

Question 29

In the 1990s, the FASB considered making a new rule to count stock option awards by companies as expenses. Some companies protested to the FASB, and to Congress, and the FASB at that time decided not to make the new rule. This is an example of what type of reaction to accounting measurement?

	A.	Acting to modify the measurement system before it goes into effect.
	B.	Doing what is desired in response to being measured
	C.	Doing what looks good on the measurement system, even though it was not what was actually desired
	D.	Lying

Question 30

Historically, which of the following has not been a factor leading toward more conservatism in accounting principles?

	A.	The influence of creditors and bankers interested in ensuring their loans will be repaid
	B.	The reaction of the SEC to perceived accounting abuses in the 1920s.
	C.	Corporate income taxes
	D.	The influence of CEO’s who have been given stock options

Answer 1

Q29 : C. Doing what looks good on the measurement system, even though it was not what actually desired. The FASB wanted to make the rule then but could not implement due to the protest from some companies.

Q30 : A. The influence of creditors and bankers interested in ensuring their loans will be repaid. It is not a factor leading to conservatism in accounting principles.