Certified Valuation Analyst (CVA) Practice Exam

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Prepare for the Certified Valuation Analyst Exam. Enhance your skills with flashcards and multiple-choice questions, complete with hints and explanations. Begin your journey to becoming a certified professional!

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Which agency sets the standard of value for financial reporting?

SEC
FASB
IRS
GAO

The correct answer is: SEC

The correct answer is the Financial Accounting Standards Board (FASB). The FASB is responsible for establishing accounting standards in the United States, which include setting the standards for the value of financial reporting. It develops Generally Accepted Accounting Principles (GAAP) that govern how financial statements are prepared and presented, including the valuation of assets and liabilities. The FASB's role is crucial because it ensures transparency, consistency, and comparability in financial statements, thus affecting how entities report their financial position and performance. These standards are critical for investors, regulators, and the overall market to understand the true financial state of a business. The other agencies mentioned have different functions: the SEC primarily oversees the securities markets and protects investors, the IRS deals with tax regulations and enforcement, while the GAO focuses on auditing government spending and performance. None of these agencies set standards for financial reporting valuations in the same way that the FASB does.