QUESTIONS 1. Differentiate broadly between financial accounting and managerial accounting. 2. Differentiate between "financial statements" and "finan- cial reporting." 3. How does accounting help the capital allocation process? 4. What is the objective of financial reporting? 5. Briefly explain the meaning of decision-usefulness in the context of financial reporting 6. Of what value is a common set of standards in financial accounting and reporting? 7. What is the likely limitation of general-purpose finan- cial statements"? 8. In what way is the Securities and Exchange Commission concerned about and supportive of accounting principles and standards? 9. What was the Committee on Accounting Procedure, and what were its accomplishments and failings? 10. For what purposes did the AICPA create the Accounting Principles Board? 11. Distinguish between Opinions of the Accounting Princi ples Board and Accounting Standards Updates. 12. If you had to explain or define "generally accepted accounting principles or standards," what essential char- acteristics would you include in your explanation? 13. In what ways was it felt that the pronouncements issued by the Financial Accounting Standards Board would carry greater weight than the opinions issued by the Accounting Principles Board? 14. How are FASB preliminary views and FASB exposure drafts related to FASB "statements"? 15. Distinguish between FASB Accounting Standards Updates and FASB Statements of Financial Accounting Concepts. 16. What is Rule 203 of the Code of Professional Conduct? 17. The chair of the FASB at one time noted that the flow of standards can only be slowed if (1) producers focus less on quarterly earnings per share and tax benefits and more on quality products, and (2) accoun- tants and lawyers rely less on rules and law and more on professional judgment and conduct." Explain his comment 18. Explain the role of the Emerging Issues Task Force in establishing generally accepted accounting principles. Concepts for Analysis 23 19. What is the difference between the Codification and the Codification Research System? 20. What are the primary advantages of having a Codifica- tion of generally accepted accounting principles? 21. What are the sources of pressure that change and influ- ence the development of GAAP? 22. Some individuals have indicated that the FASB must be cognizant of the economic consequences of its pro- nouncements. What is meant by "economic conse- quences"? What dangers exist if politics play too much of a role in the development of GAAP? 23. If you were given complete authority in the matter, how would you propose that GAAP should be developed and enforced? 24. One writer recently noted that 99.4 percent of all compa nies prepare statements that are in accordance with GAAP. Why then is there such concern about fraudulent financial reporting? 25. What is the "expectations gap"? What is the profession doing to try to close this gap? 26. The Sarbanes-Oxley Act was enacted to combat fraud and curb poor reporting practices. What are some key provisions of this legislation? 27. What are some of the major challenges facing the account ing profession? 28. How are financial accountants challenged in their work to make ethical decisions? Is technical mastery of GAAP not sufficient to the practice of financial accounting