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Question 1

At what value should non-interest bearing promissory notes be recorded?

Answer 1

At the present value of all future payments required by the note. Payments are discounted at the market interest rate.

Question 2

How are equipment used in R&D activities that have an alternative future use treated?

Answer 2

Capitalized and depreciated over its estimated useful life. (Not over the R&D project length)

Question 3

Under what circumstance is a restoration of carrying value for long-lived assets if an asset’s FV increases subsequent to recording an impairment loss?

Answer 3

Only when the asset is held for disposal.

Question 4

How are trading securities reported on the balance sheet?

Answer 4

Trading securities are reported at fair value

Question 5

How are available for sale securities reported on the balance sheet?

Answer 5

Available for sale securities are reported at fair value

Question 6

How are held-to-maturity securities reported on the balance sheet?

Answer 6

Held-to-maturity securities are reported at amortized cost.

Question 7

What is the economic resources measurement focus for Gov accounting?

Answer 7

Financial reporting centers on the costs of services and the efficiency and effectiveness with which invested capital has been used.

Question 8

What is the current financial resources measurement focus for Gov accounting?

Answer 8

Fund balance is a measure of available, spendable, or appropriable resources.

Question 9

Which government funds use the modified accrual basis of accounting?

Answer 9

Current financial resources measurement focus: (GRaSPP)
General
special Revenue
and
Debt Service
Capital Projects
Permanent

Question 10

Which government funds use the full accrual basis of accounting?

Answer 10

The economic resources measurement focus and full accrual basis of accounting is used for both gov-wide FS as well as the fund presentations of the fiduciary and proprietary funds. (SE-CIPPOE)
Service
Enterprise
Custodial
Investment trust
Private purpose trust
Pension and Other Employee benefit trust

Question 11

How is net periodic pension cost calculated?

Answer 11

SIR AGE
Service cost (Current)
\+Interest Cost
-Return on plan assets
\+Amortization of prior service cost
-Gains and +losses
\+amortization of Existing net obligations or net asset

Question 12

What is the bonus method for a partner withdrawal from a partnership?

Answer 12

The bonus method allocates the excess of payout over the partner’s capital account to the remaining partner’s capital account. (Reducing them)

Question 13

What are functional expenses?

Answer 13

Functional expenses are costs of a major program or support services. Purpose and mission of the organization.

Question 14

What are natural expenses?

Answer 14

Natural expenses are ordinary expenses such as salaries, rent, interest expense, supplies. Similar to SGA.

Question 15

What type of expenses must be reported by a NPO?

Answer 15

An NPO must report both functional and natural expenses.

Question 16

What is the purpose of the statement of financial position for an NPO?

Answer 16

The purpose of the statement of financial position for an NPO is to provide relevant information about the assets, liabilities, and net assets, and about their relationships to one another at a moment in time.

Question 17

What are program and supporting service expenses?

Answer 17

A program expense is any expense that relates to the activities for which an organization is chartered, while a supporting service expense is any expense not classified as a program service expense.

Question 18

How must an NPO reports its expenses?

Answer 18

An NPO needs to report its expenses in the statement of activities by their functional classification, and disclose the expenses in a natural classification by function in the notes to the financial statements.

Question 19

What is the appropriate characterization of the net assets of an NPO?

Answer 19

Net assets are most appropriately characterized as the residual interest of the NPO.

Question 20

How should unconditional pledges received by an NPO that will be collected over more than one year be reported?

Answer 20

Pledges receivable, valued at their present values.