Identify the major contributions of APB Statement 4.
What will be an ideal response?
ANSWER:
The major contributions of APB Statement 4 are:
(1) It defined accounting along the user-oriented track taken by ASOBAT.
(2) It adopted ASOBAT’s very strong emphasis on the diversity of users, but went further by stating the users of financial statements should be knowledgeable and should understand the characteristics and limitations of financial statements.
(3) It viewed financial statements as being general purpose in nature as opposed to oriented toward a limited group of users.
(4) It noted that accounting is a measurement discipline.
(5) The qualitative objectives identified consist of relevance, understandability, verifiability, neutrality, timeliness, comparability, and completeness. These would later appear as qualitative characteristics in the conceptual framework. The statement concurs with ASOBAT on possible conflict among objectives.
(6) It concentrated on developing the user-oriented approach.
(7) The pervasive principles and modifying conventions in the section on generally accepted accounting principles consist of those concepts that constitute the heart of the system of historical costing.
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