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FAR > 1 - Conceptual Framework, Standard-Setting, and Financial Reporting > Flashcards

1 - Conceptual Framework, Standard-Setting, and Financial Reporting Flashcards

1
Q

valuation accounts

A

increase or decrease the carrying value of assets are part of the related asset and are not assets, or liabilities. ex. adjunct(increase)-premium on bond contra(decrease)-discount on bond, deprc.

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2
Q

relevance

A

predictive value, confirmatory value, or both

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3
Q

faithful representation—reliability/SFAC 8.3

A

complete, neutral, and free from error

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4
Q

interim income statement, income tax rate

A

use estimated effective annual rate against entire year’s income before income tax expense

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5
Q

fundamental qualitative characteristics of accounting information

A

relevance and faithful representation

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6
Q

-interim financial reporting FASB ASC 270-10-45-1

A

each period viewed as an integral part of an annual period

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7
Q

cost-benefit

A

FASB assesses whether the benefits of reporting particular information are likely to justify the costs incurred to provide and use that information

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8
Q

enhancing qualitative characteristics

A

comparability, verifiability, timeliness, and understandability

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9
Q

Direct cash flow

A

add cash receipts from sales, interest, dividends, and the sale of equity securities
deduct cash payments for purchases, operating expenses, interest, income taxes, and the purchase of equity securities

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10
Q

cash paid for COGS- direct cashflow

A 
COGS
add an increase in inventory
deduct a decrease in inventory
add a decrease in accounts payable
deduct an increase in accounts payable
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11
Q

comprehensive income

A

change in equity(net assets) from transactions and other events from non owner sources - all changes in equity except investments by owners and distributions TO owner

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12
Q

discontinued operations

A

includes all previously unrecognized gains or losses from the sale of the discontinued component and the results of operations for the discontinued component during the reporting period— reported net of tax

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13
Q

historical cost principle

A

assets recorded and carried at their historical acquisition cost

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14
Q

current ratio

A

current assets/ current liabilities:

cash, ar, inventory

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15
Q

unrealized changes in fair value between periods

A

reported in other comprehensive income, gains and losses reported on income statement when realized

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16
Q

notes to financial statements

A

significant accounting principles used
alternative measures for assets and liabilities
information about long-term obligations(when due, interest rate, restrictive policies)
inventory measurement method used(lifo,fifo,etc)
revenue recognition policies
discussion of contingencies, claims, and assessments

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17
Q

financing activities

A

Issuance/repayment of debt
Issuance/repurchase of common or preferred stock
resale of treasury stock(+)
payment of dividends(-)

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18
Q

SEC rulemaking

A

concept release
rule proposal
rule adoption

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19
Q

impairment loss

A

only recognized if the carrying amount of a long-lived asset is not recoverable and exceeds its fair vale

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20
Q

definition of a gain

A

increase in equity form peripheral or incidental transactions of an entity and from all other transactions and other events and circumstances affecting the entity during a period except those that result form revenues or investments by owners

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21
Q

reliability

A

information about an item must be representationally faithful, verifiable, and neutral

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22
Q

SFAC 4

A

to provide a BASIS for establishing detailed accounting and reporting standards for nonbusiness entities

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23
Q

accrual

A

economic events that have already occurred, but have not yet been settled

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24
Q

deferral

A

items that have been paid for in advance, but their associated underlying economic event has not occurred yet

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25
Q

inventory losses- interim

A

if losses are recovered in subsequent period, gain recognized but by the amount of the previously booked loss.

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26
Q

GASB

A

GOVERMENT not-for-profit organizations follow the SLG GAAP hierarchy in determining applicable GAAP

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27
Q

current cost

A

report assets at the amount of cash or its equivalent that would have to be paid if the same or equivalent assets were acquired currently

28
Q

residual interest

A

net assets of a nongovernmental not-for-profit—assets minus liabilities

29
Q

capital maintenance concept

A

the recovery of cost; separation of return on capital from return of capital

30
Q

financial capital concept

A

the effects of price changes on assets held and liabilities owed are recognized as “holding gains and losses” and included in return on capital

31
Q

physical capital concept

A

the effect on price changes are recognized as “ capital maintenance adjustments” as a separate element of equity and would not be included in return on capital

32
Q

asset - essential characteristics

A
  1. probable future benefit
  2. particular entity can obtain the benefit and control others’ access to it
  3. the transaction or other event giving rise to the entity’s right to or control of the benefit has already occurred
33
Q

objectivity

A

states that the economic activity that underlies financial statements must be substantive in fact and presented without bias

34
Q

continuity or going concern

A

states that an entity is assumed to have a life that is indefinite or at least sufficiently long for it to accomplish its objectives and fulfill its legal obligations

35
Q

exposure draft, aka

A

proposed accounting standards update

36
Q

SFAC 4 - nonbusiness organizations indicator of performance

A
  1. information about the nature and relationship between inflows and outflows of resources
  2. information about service efforts and accomplishments
37
Q

IFRS- Interest expense

A

Finance Cost

38
Q

IFRS - noncash transactions

A

reported in notes to cash flow and not on face

39
Q

deferred tax liability/asset

A

classified as concurrent

40
Q

accumulated other comprehensive income

A

reported as part of equity on the balance sheet/statement of financial position–can increase or decrease total S/E

41
Q

articulation

A

means financial statements are fundamentally interrelated

42
Q

single step income statement

A

net income=(revenues + gains) - (expenses + losses)

43
Q

component of an entity

A
  • segment
  • reporting unit
  • or asset group(not a part of a line of business)
  • whose operations and cash flows are clearly distinguished from the rest of the entity, operationally as well as for financial reporting purposes
44
Q

variable interest entity

A

a legal entity subject to consolidation according to the provisions of the “Variable Interest Entities” subsections of FASB ASC 910-10

45
Q

multi-step income statement

A
  • shows calc for gross profit in order to show efficiency in use of labor and supplies
  • shows operating income vs. non-operating items
46
Q

diluting securities

A

stock options or warrants
convertible preferred stock
convertible bonds
contingent shares - shares will be issued if a conditions is met

47
Q

financials of defined contrib. retirement plan

A

net assets available for benefits of the plan

changes in net assets available for benefits

48
Q

NFP - supporting activities

A
  1. )management and general

2. )fundraising

49
Q

operating segments

A
  1. )engage in business activity result revenues and expenses
  2. ) regularly reviewed by chief oper. officer
  3. )discrete financial info. is available
50
Q

special purpose frameworks

2160.01

A 
cash basis
tax(income) basis
regulatory basis
contractual basis
other basis
51
Q

impairment

A

carrying amount exceeds undiscounted future cash flows

52
Q

reportable segments

A

revenue test
profitability test
asset test

53
Q

inventory turnover

A

COGS/ average inventory

54
Q

AR turnover

A

net sales/average AR

55
Q

Markup to Margin

A

=markup/(1+markup)

56
Q

LCNRV—FIFO and Weighted Average

A 
replacement cost(market)- what you repurchase for
NRV-what can you sell it for minus costs to move
57
Q

perpetual vs periodic

A

perpetual - takes sales out of inventory as they happen

periodic - wait until the end of the period

58
Q

supplemental disclosures to the Cash Flows

A

income tax paid
interest paid
conversion of debt to equity

59
Q

SFAC 8 limitations related to disclosure requirements

A

cost constraint
relevance
potential adverse consequences
future-oriented information

60
Q

LCM — LIFO and Retail Inventory

A

replacement cost
ceiling - NRV
Floor- NRV-Profit Margin
—-compare against original cost

61
Q

Bonus % of NI after NI-Bonus

A

B=%ofSalesBonus (NI-Bonus)

62
Q

Times Interest Earned

A

EBIT/ Interest Payments

63
Q

Debt - - Equity

A

Total Liabilities/ Shareholders Equity

64
Q

Long-term debt to Capitalization

A

Long Term Debt/ LT Debt+Preferred Stk+ Common Stk

65
Q

Debt Service Coverage

A

Net Operating Income/ Total Debt Service

FAR (1 decks)

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