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CPA Exam - FAR > 1D, Company Reporting Topics > Flashcards

1D, Company Reporting Topics Flashcards

1
Q

For Developmental Stage Enterprises - What costs are Capitalized?

  1. ?????
  2. Equipment
  3. Furniture
  4. Security Deposits
A

Leasehold Improvements

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2
Q

For Developmental Stage Enterprises - What costs are Capitalized?

  1. Leasehold Improvements
  2. ?????
  3. Furniture
  4. Security Deposits
A

Equipment

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3
Q

For Developmental Stage Enterprises - What costs are Capitalized?

  1. Leasehold Improvements
  2. Equipment
  3. ?????
  4. Security Deposits
A

Furniture

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4
Q

For Developmental Stage Enterprises - What costs are Capitalized?

  1. Leasehold Improvements
  2. Equipment
  3. Furniture
  4. ?????
A

Security Deposits

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5
Q

For Developmental Stage Enterprises - What costs are Capitalized?

A
  1. Leasehold Improvements
  2. Equipment
  3. Furniture
  4. Security Deposits
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6
Q

For Developmental Stage Enterprises - What costs are expensed?

  1. ?????
  2. Laboratory Operations
  3. General and administrative expenses
  4. Depreciation
A

Research and Development

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7
Q

For Developmental Stage Enterprises - What costs are expensed?

  1. Research and Development
  2. ???????
  3. General and administrative expenses
  4. Depreciation
A

Laboratory Operations

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8
Q

For Developmental Stage Enterprises - What costs are expensed?

  1. Research and Development
  2. Laboratory Operations
  3. ???????
  4. Depreciation
A

General and administrative expenses

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9
Q

For Developmental Stage Enterprises - What costs are expensed?

  1. Research and Development
  2. Laboratory Operations
  3. General and administrative expenses
  4. ???????
A

Depreciation

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10
Q

For Developmental Stage Enterprises - Are leasehold improvements - Capitalized or Expensed?

A

Capitalized

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11
Q

For Developmental Stage Enterprises - Is Equipment - Capitalized or expensed?

A

Capitalized

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12
Q

For Developmental Stage Enterprises - Is furniture - Capitalized or expensed?

A

Capitalized

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13
Q

For Developmental Stage Enterprises - is Research and Development - Capitalized or Expensed

A

Expensed

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14
Q

For Developmental Stage Enterprises - are laboratory Operations - Capitalized or expensed

A

Expensed

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15
Q

For Developmental Stage Enterprises - Are General and Administrative expenses - Capitalized or expensed?

A

Expensed

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16
Q

For Developmental Stage Enterprises - is Depreciation - Capitalized or expensed?

A

Expensed

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17
Q

What information does Form 8K provide?

A

Reports current events so that investors can obtain important info about material events in a timely manner

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18
Q

What’s included in the Form 8k

  1. ?????
  2. Notification about entering into material agreements (ex mergers)
  3. Entering into Debt or other Financial obligations

4 Creation of an obligation under an off balance sheet arrangement of a registrant

  1. The unregistered sale of equity securities
  2. A change in a registrant’s certifying accountant
A

Quarterly Earnings releases

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19
Q

What’s included in the Form 8k

  1. Quarterly Earnings releases
  2. ?????
  3. Entering into Debt or other Financial obligations

4 Creation of an obligation under an off balance sheet arrangement of a registrant

  1. The unregistered sale of equity securities
  2. A change in a registrant’s certifying accountant
A

Notification about entering into material agreements (ex mergers)

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20
Q

What’s included in the Form 8k

  1. Quarterly Earnings releases
  2. Notification about entering into material agreements (ex mergers)
  3. ????????

4 Creation of an obligation under an off balance sheet arrangement of a registrant

  1. The unregistered sale of equity securities
  2. A change in a registrant’s certifying accountant
A

Entering into Debt or other Financial obligations

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21
Q

What’s included in the Form 8k

  1. Quarterly Earnings releases
  2. Notification about entering into material agreements (ex mergers)
  3. Entering into Debt or other Financial obligations

4 ?????

  1. The unregistered sale of equity securities
  2. A change in a registrant’s certifying accountant
A

Creation of an obligation under an off balance sheet arrangement of a registrant

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22
Q

What’s included in the Form 8k

  1. Quarterly Earnings releases
  2. Notification about entering into material agreements (ex mergers)
  3. Entering into Debt or other Financial obligations

4 Creation of an obligation under an off balance sheet arrangement of a registrant

  1. ?????
  2. A change in a registrant’s certifying accountant
A

The unregistered sale of equity securities

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23
Q

What’s included in the Form 8k

  1. Quarterly Earnings releases
  2. Notification about entering into material agreements (ex mergers)
  3. Entering into Debt or other Financial obligations

4 Creation of an obligation under an off balance sheet arrangement of a registrant

  1. The unregistered sale of equity securities
  2. ?????
A

A change in a registrant’s certifying accountant

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24
Q

What’s included in the Form 8k

A
  1. Quarterly Earnings releases
  2. Notification about entering into material agreements (ex mergers)
  3. Entering into Debt or other Financial obligations

4 Creation of an obligation under an off balance sheet arrangement of a registrant

  1. The unregistered sale of equity securities
  2. A change in a registrant’s certifying accountant
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25
Q

Are Quarterly results of Operations required to be in form 8k?

A

No, its for announcement of quarterly releases

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26
Q

Is the financial condition of required to be reported in form 8k?

A

no

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27
Q

What is the Form 10Q

A

Report of a public company performance that must be filed quarterly with SEC.

It includes unaudited F/S and provides a continuing view of the company financial position during the year

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28
Q

Is the Form 10Q audited?

A

No

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29
Q

Public Equity Float

A

Amount of equity available in a company for investors to invest in

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30
Q

Small Reporting Company is defined by SEC as a company with less than how much in public equity float?

A

$75 million

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31
Q

Which companies are required to disclose EPS

A

Companies whose shares and potential shares are publicly traded

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32
Q

How to calculate EPS

A

(Net income - Preferred Stock Dividends)/ WACS

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33
Q

How are shares of preferred stock treated when calculating WACS

A

They are not included

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34
Q

When calculating Basic EPS - The numerator is - Net income - P Stock Divs - Are those dividends subtracted at the full amount or net of tax

A

Full amount

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35
Q

How are shares repurchased treated when Calculating WACS?

A

They are subtracted using pro rate amount #months/12

Ex: 3/31 20k shares are repurchased, 700k shares outstanding on 1/1

9/15 x 20k = 15k

700k - 15l = 685

*Check this to confirm

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36
Q

When you’re comparing the WACS from yr 1 & yr 2 - and there’s a stock split in yr 2 - How does that affect the comparisons?

A

Do stock split in yr 1 also to compare year 2 WACS

Ex: 100k shares yr 1

Yr 2 2k shares were issued then 2 for 1 stock split - now you have 250k shares

You would (split 100k shares to compare)

200k vs 250k

not 100k vs 250k

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37
Q

You’re comparing the WACS for year 1 & 2

Yr 1: 100k shares

yr 2: added 25k shares then stock split 2 for 1 (so 250k shares in total)

How do you compare the 2 numbers

A

Split yr 1 as well to compare

200k vs 250k

NOT

100k vs 250k

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38
Q

When seeing if a segment is reportable - You see if that one segment is 10% of combined…

What 3 options

  1. ?????
  2. Profit/loss
  3. Revenue
A

Assets

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39
Q

When seeing if a segment is reportable - You see if that one segment is 10% of combined…

What 3 options

  1. assets
  2. ?????
  3. Revenue
A

Profit/loss

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40
Q

When seeing if a segment is reportable - You see if that one segment is 10% of combined…

What 3 options

  1. assets
  2. Profit/loss
  3. ?????
A

Revenue

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41
Q

When seeing if a segment is reportable - You see if that one segment is 10% of combined…

What 3 options

A
  1. assets
  2. Profit loss
  3. Revenue
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42
Q

If 10% or more of enterprise revenue comes from one customers - The segment making those sales must ____

A

be disclosed

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43
Q

What are Cumulative Preferred Stocks

A

A type of preferred stock with the stipulations that if any dividends payments are missed, in the past - The divs owed must be paid to the shareholders first

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44
Q

Preferred stock typically has a ___ dividend yield on the ____ value of stock

A
  1. Fixed

2. Par

45
Q

Preferred stocks are valued similarly to ____

A

Bonds

46
Q

P Stocks are valued similarly to Bonds - BUT - Bond proceeds are considered a liability - P Stock Proceeds are considered ______

A

an asset

47
Q

What are dividends in Arrears

A

When a company fails its dividends to preferred shareholders (who are guaranteed payments) the total amount owed to the investor is recorded on its balance sheet as dividends in arrears

48
Q

When a company fails its dividends to preferred shareholders (who are guaranteed payments) the total amount owed to the investor is recorded on its balance sheet as ______

A

Dividends in Arrears

49
Q

In which financial statement are dividends in arrears recorded?

A

Balance Sheet

50
Q

For the Profit (loss) test for reportable segments - You’re looking at the combined 10% of what

A

Either 10% of the greater (in absolute amount) od combined reported profit of segments that did not report a loss

or did not report a profit

51
Q

What is an SEC Registration Statement?

A

Set of documents a company must file with SEC before it proceeds with a public offering

52
Q

Who’s responsibility is it to ensure full and fair disclosure in an SEC registration statment

A

The Issuer’s responsibility

53
Q

What if -When filing an SEC registration statement - All material facts are not adequately disclosed by the Issuer?

A

Must be corrected or expanded by means of an amendment

54
Q

What happens -When filing an SEC registration Statement - and amendment is made to statement by the issuer - but it still doesn’t resolve the deficiencies?

A

SEC may exercise a “Stop order” or “refusal order” to prevent registration statement from becoming effective and prevent securities from being sold until corrected

55
Q

When filing an SEC registration Statement - and amendment is made to statement by the issuer - but it still doesn’t resolve the deficiencies?

SEC may exercise a _____ or _____

A

Stop order

Refusal order

56
Q

When is a security Dilutive

A

When the inclusion of the security results in a smaller EPS

or increases loss per share

57
Q

in Calculating Diluted EPS - For convertible bonds - you use the ____ Method

A

If Converted

58
Q

When using the If converted method - what type of securities are involved

A

Convertible Bonds

59
Q

When doing the if converted method - for dilated EPS - How is the numerator treated?

A

Interest from convertible bonds are added back to the numerator

60
Q

When you’re adding back Interest to numerator - in dilutive EPS - What amount of interest expense do you use

A

Interest expense net of income taxes

61
Q

When doing the if converted method -for dilutive EPS - How is the denominator of EPS equation treated

A

Add the new amount of stock from bonds being converted to stock

62
Q

When Calculating Dilutive EPS -Using the TREASURY STOCK METHOD - What is done to the numerator

A

Nothing different

Still Net income - Preferred Dividends

63
Q

When Calculating Dilutive EPS -Using the TREASURY STOCK METHOD - What is done to the Denominator

A

WACS is added by Shortfall of proceeds from stock vs amount needed to buy shares for options

64
Q

What does the Shortfall mean - in the context of Calculating Dilutive EPS - Using the Treasury Stock Method

A

The amount of shares you are short on for buying back stock to provide to people exercising their option

65
Q

How do you find the Shortfall for the Treasury stock method - When calculating dilutive EPS

A

Difference The amount of shares your can buy back at market price - with the proceeds from exercising option - vs the amount of shares from the conversion of the bonds

66
Q

Formula for Dilutive EPS - Treasury stock method

A

Net income - preferred Divs / Shares outstanding + Shortfall

67
Q

Basic EPS $1.29
You have a 7% Convertible Bond -issued at par - each $1000 bonds convertible into 40 shares of common stock - Tax Rate is 30% How do you go about figuring out if it’s Dilutive EPS

A

for numerator - after tax interest = 49

For denominator - #shares added for each $1000 = 40 shares

49/40 = 1.225

That’s lower than basic EPS of 1.29

68
Q

Basic EPS $1.29
You have a 7% Convertible Bond -issued at par - each $1000 bonds convertible into 40 shares of common stock - Tax Rate is 30% How do you go about figuring out if it’s Dilutive EPS - Just Numerator part?

A

After tax interest

1000 x 7% x (1-.3) = 49

69
Q

Basic EPS $1.29
You have a 7% Convertible Bond -issued at par - each $1000 bonds convertible into 40 shares of common stock - Tax Rate is 30% How do you go about figuring out if it’s Dilutive EPS - Just Denominator part?

A

40

However many shares each $1,000 bond converts to

70
Q

What makes something anti dilutive?

A

If the act of it will result in an increase of EPS

71
Q

What makes a convertible bond anti dilutive

A

If its conversion results in increase of EPS

72
Q

If a convertible bond is anti dilutive - Why is it not included in EPS?

A

Because it is assumed that the owner wouldn’t convert the bonds because they would be worse off in doing so.

73
Q

3 Categories of Companies Required to file documents documents with SEC

  1. ?????
  2. Companies with assets of over $10 million and at least 500 shareholders
  3. Companies that have sold securities to the public pursuant to a registration, such as an initial public offering
A

Companies whose stocks are traded on a national stock exchange

74
Q

3 Categories of Companies Required to file documents documents with SEC

  1. Companies whose stocks are traded on a national stock exchange
  2. ???
  3. Companies that have sold securities to the public pursuant to a registration, such as an initial public offering
A

Companies with assets of over $10 million and at least 500 shareholders

75
Q

3 Categories of Companies Required to file documents documents with SEC

  1. Companies whose stocks are traded on a national stock exchange
  2. Companies with assets of over $10 million and at least 500 shareholders
  3. ????
A

Companies that have sold securities to the public pursuant to a registration, such as an initial public offering

76
Q

3 Categories of Companies Required to file documents documents with SEC

A
  1. Companies whose stocks are traded on a national stock exchange
  2. Companies with assets of over $10 million and at least 500 shareholders
  3. Companies that have sold securities to the public pursuant to a registration, such as an initial public offering
77
Q

What makes a Company an Accelerated Filer?

A

A company that has a public float of $75 million but less than $700 million

78
Q

What make a company a large accelerated filer?

A

A company that has a public float of over $700 million

79
Q

How many days after the end of the quarter - do accelerated filers have - to file form 10Q?

A

40 days

80
Q

How many days after the end of the quarter - do large accelerated filers have - to file form 10Q?

A

40 days

81
Q

Where should Deficits accumulated - during the developmental stage of a company - be reported ?

A

Reported as part of stockholders’ equity

82
Q

If Converted Method for Dilutive EPS - It assumes conversion of convertible securities - as of the …

A

Beginning of the earliest period reported

or

at time of issuance (whichever is later)

83
Q

When doing the If converted method for Diluted EPS - How do you find Annual interest paid on bonds?

___ Value x ___ Interest rate

A

Face

Stated

84
Q

When doing the If converted method for Diluted EPS - What do you do with amortization of discount on bonds?

A

Add amortization of discount to the Face value x Stated interest rate

85
Q

For Non Accelerated Filers - Within how many days after the end of the company’s fiscal year - do they need to file form 10K

A

90 days

86
Q

For Accelerated Filers - Within how many days after the end of the company’s fiscal year - do they need to file form 10K

A

75 Days

87
Q

For Large Accelerated Filers - Within how many days after the end of the company’s fiscal year - do they need to file form 10K

A

60 days

88
Q

how are inventory losses recognized interim financial statements

A

Recognized in period in which decline occurs

89
Q

How is the recovery of inventory losses (inventory losing value) -that was recorded in interim F/S - recorded in subsequent interim periods

A

Recorded as gains, to the extent of losses recognized in previous interim periods of same fiscal year

90
Q

Regulation S-X

A

Principle accounting regulation of the SEC, governing the annual report

All F/S presents in annual reports must conform to S=X Accounting & disclosure rules

91
Q

Regulation S-T

A

Cornerstone for EDGAR rules, prescribing requirements for electronic filing and the procedures for making such filings

92
Q

The ____ is among the first to identify emerging financial accounting and reporting issues

A

SEC

93
Q

True or False

The SEC may refer emerging financial accounting and reporting issues to the FASB

A

True

94
Q

True or False

Publicly traded entities frequently clear accounting treatment with SEC Staff in advance of all transactions or events being recorded in the Financial statements

A

True

95
Q

The _______ of the SEC attends the FASB’s EITF meetings and takes the position that since an EITF consensus sets the tone for future accounting

A

Chief Accountant

96
Q

The chief accountant of the SEC attends the FASB’s ___ meetings and takes the position that since an ___ consensus sets the tone for future accounting

A

EITF

EITF

97
Q

True or False

The SEC does not have broad statutory powers to make, amend, and rescind any rules and regulations that may be necessary to carry out the provisions of law

A

False,

they do

98
Q

What is the Basic Information Package (BIP)?

A

Financial disclosures for SEC filings

99
Q

The Basic Information Package consists of….

____ year comparative selected financial data

A

5

100
Q

True or false

The BIP consists of …

Managements discussion and analysis of the financial condition and results of operations

A

True

101
Q

The BIP consists of …

Data explaining the circumstances applicable to change in the registrant’s ____ during the prior ____ years

A

Independent Accountant

2

102
Q

If Market Price of Inventory Declines - How is it treated in interim financial statements

A

It is not written down as a decline

103
Q

If at first a decline in market price of inventory is expected to recovered by the end of the year - but later discovered that it won’t be recovered - How is that treated in interim F/S

A

If it is determined afterwards that it will not recover - it should be recognized in earliest interim period it is determined

104
Q

For Interim F/S how are COGS estimated

A

Use gross profit rates

*only for interim, not permitted in annual year end reporting

105
Q

Can you use gross profit rates - in annual year end reports - to estimate COGS

A

No

106
Q

An enterprise is required to report a measure of segment _____ and segment ____ and certain related items

A

Profit/loss

Assets

107
Q

Are enterprises required to report segment cash flows?

A

No

108
Q

Are segment required to report segment liabilities

A

No

109
Q

Which Act requires filing of periodic reports with SEC?

A

Securities Exchange Act of 1934

CPA Exam - FAR (8 decks)

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