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Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
ISBN: 9781337788281

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BuyFindarrow_forward

Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
ISBN: 9781337788281
Textbook Problem
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Considerable political and social influence is wielded by financial statement preparers and users—those parties who are most interested in or affected by accounting standards.

A premise of the FASB’s standard-setting process is that it should operate in full view of the public, affording interested parties ample opportunity to make their views known. The extensive procedural steps employed by the FASB in the standard-setting process supports this premise.

Required:

Write a brief report that describes why financial accounting standards inspire or encourage political action and involvement during the standard-setting process.

To determine

Describe the reasons for the political involvement during the accounting standards setting process.

Explanation

Financial accounting standards are used by cross sections of organizations for the preparation and presentation of the financial reports to be used by various stakeholders involved.

Since the effect of the accounting standards are wide ranging and have consequence on the economic front, it inspire or encourage political and social involvement during the development of accounting standards. Setting the accounting standards become a social decision as its users play a major role due to the widespread impact.

Various stakeholders and interest groups become vocal while accounting standards are being set due to its economic impact and consequences. They become active and fight, as various parties wish the accounting standards be formulated to protect their interests...

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