Give expert answer When establishing accounting policies for a new business venture, what role should professional judgmentplay in selecting between alternative acceptable methods? Is there a clear line between professionaljudgment and accounting manipulation?

1. The Role of Professional JudgmentProfessional judgment is essential in accounting…

Answered: When establishing accounting policies…

Business/Professional Ethics Directors/Executives/Acct

8th Edition

ISBN:9781337485913

Author:BROOKS

Publisher:BROOKS

Chapter6: Professional Accounting In The Public Interest

Section: Chapter Questions

Problem 11Q

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What is the concept of conservatism in accounting and why is it important? Discuss the potential drawbacks of applying conservatism too strictly.
It has been suggested that not all accounting choices are made by management in the best interest of fair and consistent financial reporting. Required: What motivations can you think of for management’s choice of accounting methods?
Positive Accounting Theory seeks to: Select one: a. explain and predict which accounting methods management is likely to select from available choices.C. describe how social relationships are implicated in lobbying by interest groups in accounting standard-setting. b. describe how social relationships are implicated in lobbying by interest groups in accounting standard-setting. c. prescribe which accounting methods should be used in particular circumstances d. formulate an understanding of how accountability to a broader set of stakeholders should be achieved.
why is it important to improve the quality of accounting standards?
How do changes in accounting standards or policies affect accounting quality?
Economics (a) Which would you choose as the priority for ethical behaviour in the accounting profession: “protect the public interest” or “protect the credibility of the profession?” Explain, providing an example. (b) Explain the affiliation between the fiduciary relationship and conflict of duties when a professional accountant provides a service to a client. Provide an example
Which among the following are the reasons why regulation of the accounting profession is essential? i. Regulations address the knowledge imbalance between the provider and purchaser of professional service. ii. Regulations ensure that accounting services are of the right quality. iii. Regulations ensure that the cost benefits to these third parties are taken into account. a. i and ii b. i, ii, and iii c. i and iii d. ii and iii
Define the phrase “earnings management.” Under what conditions, if any, is earnings management acceptable? Do auditors’ responsibilities include actively searching for instances of earnings management by clients? Defend your answers.
In the context of accounting conservatism, explain how accountants should handle uncertain events and estimates when preparing financial statements. Consider the impact of this principle on asset valuation and revenue recognition timing. What safeguards does this principle provide against overly optimistic financial reporting?
Under this qualitative characteristic, users are assumed to have a reasonable knowledge of business and economic activities and accounting and a willingness to study the information with reasonable diligence. However, information about complex matters that should be included in the financial statements because of its relevance to the economic decision-making needs of users should not be excluded merely on the grounds that it may be too difficult for certain users to understand
Which of the following is not considered an analyticalaspect of the accounting profession?a. Evaluating an organization’s operational effi ciency.b. Forecasting the probable results of future operations.c. Designing systems that provide information to decisionmakers.d. Journalizing and posting business transactions.
What difficulties do differences in accounting standards create for investors?

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When establishing accounting policies for a new business venture, what role should professional judgment play in selecting between alternative acceptable methods? Is there a clear line between professional judgment and accounting manipulation?