Why might SFAC No. 5 be considered a “failure”?
What will be an ideal response?
ANSWER:
SFAC No. 5 did not deal extensively with the issues of recognition and measurement. It backed away from considering possible criteria for change, which suggests a continued use of present measurement attributes and reliance on evolutionary approach. It dealt with recognition ahead of measurement, but the issue of when to recognize an element cannot be discussed until we know the measurement characteristics that are to be recognized. In addition, the move toward the asset-liability viewpoint in the first three SFACs was a shift toward current valuation and away from matching. The “counterreformation” of SFAC No. 5, particularly its statement to the effect that change should occur in a gradual and evolutionary manner, effectively stymied this reform.
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Each of the following helps the Federal Reserve to be independent of the federal government except
A. the fourteen-year terms of the governors. B. the establishment of the Fed in the Constitution. C. the staggered terms of the governors. D. the independence of the Fed's income.
Procedural fairness
A. significantly increases the variability in handling customer complaints. B. empowers store employees and gives them more flexibility to resolve complaints than distributive fairness. C. is customers' perceptions of the benefits received compared with their costs in terms of inconvenience or monetary loss. D. makes customers feel they have been dealt with fairly when store employees follow company guidelines. E. is achieved when store employees have an antagonistic attitude when handling complaints.
Spencer Company had overapplied factory overhead of $5,00 . last year. Which of the following statements is not true?
a. A higher level of production may have been achieved than budgeted for. b. The Work in Process account was overcharged for the costs of factory overhead incurred during the period. c. The actual factory overhead expenses may have been less than budgeted for the operating level achieved. d. Assuming the amount is not material enough to distort net income, Cost of Goods Sold should be increased by this amount.
Which of the following is a characteristic of audit services (Table 4.3 in the text)?
A) household purchases recorded through electronic scanners in supermarkets B) households provide specific information regularly over an extended period of time; respondents asked to record specific behaviors as they occur C) verification of product movement by examining physical records or performing inventory analysis D) data banks on industrial establishment created through direct inquiries of companies, clipping services, and corporate reports