1 . Review the terms and concepts listed above in Key Terms and Concepts . 2. Reconcile the following two positions :" (1)* Standard - setting badies need a conceptual framework to guide their selection of alternative accounting principles if the principles are to have a sound foundation and exhibit consistency over time ." (21* Standard - setting bodies must continually interact with various preparers and users of financial statements to he sure that alternative accounting principles are generally acceptable ." 3. A critic of accounting stated :" The financial statements are virtually useless because firms have too much latitude in SElecting from among generally accepted accounting methods ." Another critic of accounting reacted : " I agree that the financial statements are useless , but it is because firms have too little latitude in the way they account for certain transat - Lions under generally accepted accounting principles ." Respond to these statements . 1 ." The controversy over alternative generally accepted accounting principles disappears if we require all firms to use the same methods of accounting in both their financial statements and their tax return ." Respond to this proposal . {. If net income over sufficiently long time period's equals cash inflows minus cash outflows other than transactions with owners , why not allow the timing of cash flows to dictate the timing of revenue and expense recognition and eliminate alternative CAAP ! G ." The total reported net income over sufficiently long time periods is the same regardless of whether a firm follows a Conservative strategy or a profit- maximizing strategy in selecting it's accounting methods . " Explain .\\ 7 ." The direction of the cumulative Effect of two alternative accounting principles on earnings may differ from the direction of the current year's effect." Fixplain . &." Alternative accounting principles have less of an effect on the statement of cash flows than on the balance sheet and income statement ." Fixplain .` 9. If capital markets react quickly and in an unbiased manner to the release of information , including information contained* in the financial statements , what is the benefit of analyzing a set of financial statements ?"