Question

What is required for the passage of a new FASB Accounting Standards Update?

1) Support of three board members
2) Support of five board members
3) Support of seven board members
4) Support of all board members

Answer 1

A new FASB Accounting Standards Update requires the support of a majority of the seven board members, thus at least four members must agree for an update to pass.

Step-by-step explanation:

The passage of a new FASB Accounting Standards Update requires the support of a majority of the board members. Because the Financial Accounting Standards Board (FASB) consists of seven members, the minimum number of board member votes needed to pass a new update is four, which is a simple majority. Therefore, options 1), 2), and 4) are incorrect, making the correct answer 3) Support of seven board members. This process ensures that any changes to the accounting standards have been carefully considered and agreed upon by a majority of the board.