Q5ISTQ - Intermediate Accounting (Kieso)

Question

Question: Which of the following statements is true? 

(a) The IASB has the same number of members as the FASB. 

(b) The IASB structure has both advisory and interpretation functions, but no trustees. 

(c) The IASB has been in existence longer than the FASB. 

(d) The IASB structure is quite similar to the FASB’s, except the IASB has a larger number of board members.

Step-by-Step Solution

Answer

Answer

The correct option is (d) The IASB structure is quite similar to the FASB’s except the IASB has a large number of board members.

Step 1: Definition of Accounting Standards

Accounting standards can be defined as the common principles and procedures that provide information regarding basic accounting practices. The standards promote comparability and transparency of the financial statement.

Step 2: Explanation for the correct option

Option (d) is correct because the structure of IASB and FASB is similar. The only difference is that IASB normally has 14 board members, while FASB has seven board members. 

Step 3: Explanation for incorrect options

1. Option (a) is incorrect because the number of members in IASB differs from the number in FASB.
2. Option (b) is an incorrect option because the IFRS foundation trustee is present at the second number in the organizational structure of IASB.
3. Option (c) is incorrect because FASB was in existence from 1973 while IASB was in existence from 2001.