Question

10. An Accounting Standards Update A. is authoritative, but has less authority than the Codification. It is used to make changes to the Codification. B. is not authoritative. It serves only to update the authoritative Codification. C. is the document issued by the Emerging Issues Task Force. D. includes the Board’s basis for conclusions, which then becomes part of the authoritative Codification.

Answer 1

Answer:

The correct answer is letter "B": is not authoritative. It serves only to update the authoritative Codification.

Explanation:

The Financial Accounting Standards Board (FASB) Accounting Standards Codification is the source of Generally Accepted Accounting Principles (GAAP) that applies to nongovernmental institutions valid since 2009. The Code was created in an attempt to be the primary source of accounting principles.

To avoid conflicts with the widely accepted GAAP, the FASB Accounting Standards Update Codification would only update the authoritative GAAP when necessary but has no power to create new principles. The Codification can even provide guidance on the updates, and bases for the conclusions on the changes.