BAR Exam Deck 5 Flashcards
national currency based on the location
local currency
primary economic environment currency
functional currency
presentation of financial statements currency
reporting currency
When does remeasurement of a currency occur for a company?
When a subsidiary company needs to remeasure their financial statements from the local currency to functional currency
LOCAL CURRENCY ——> FUNCTIONAL CURRENCY
When does translation occur for a company?
When a subsidiary reports their currency in a functional currency that is different then the parent company’s reporting currency
FUNCTIONAL CURRENCY —> REPORTING CURRENCY
How to determine the cost driver for activity based costing (denominator)?
Choose the cost driver with the highest correlation or coefficient of determination
Change in dependent variable that can be explained by the independent variable
What is the formula for the equity ratio?
Total equity divided by
Total Assets
What are some examples of capital expenditures
Land
Building
Patents
Machinery
How do governmental wide financial statements recognize tax revenue?
GOVERNMENTAL WIDE FINANCIAL STATEMENTS USE FULL ACCRUAL
Calculation
LEVIED PROPERTY TAXES * (1-UNCOLLECTIBLE AMOUNT)=REVENUE RECOGNIZED
How is property that is retained by the government capitalized?
Lower of the cost or market value of the asset
What is the journal entry that government wide statements use to record property tax revenue?
DR: Property Taxes receivable
CR: Allowance for uncollectible taxes
CR Property Taxes Revenue
What are the three types of program revenues for a government?
SOC ACRONYM
S Charges for services
O Operating grants and contributions
C Capital grants and contribution
How do government wide financial statements report expenses?
By their function
What is the thing to remember when it comes to the fiduciary funds in governmental wide financial statements?
They are not included in the statements
What is the journal entry to reflect expired compensatory stock options for employees?
DR: APIC stock options
CR: APIC expired stock options
What are factory foremen and would it be direct or indirect labor?
A supervisor for employees in a factor
Indirect labor
Which of these cost would be in inventory under absorption costing: Fixed Manufacturing Cost, Variable Manufacturing Cost, Fixed SG&A cost, Variable SG&A costs
Variable Manufacturing Costs
Variable SG&A Cost
Fixed Manufacturing Costs
Under Variable costs it would only be the first 2
Who assumes the risk under a defined benefit pension plan and why?
The employer
They have to cover the fixed annuities that are owed to the employee
What are the financial statements that are required for a defined benefit pension plan?
Statement of Net Assets Available for Benefits
Statement of Changes in Net Assets Availaable for Benefits
Statement of Accumulated Plan Benefits
Statement of changes in accumulated plan benefits
What is an interest rate swap?
It is literally when two companies have to owe interest on a loan and are unsatisfied with their current terms so they trade their interest rate agreement with another company.
What type of costs are included in activity based costing?
variable overhead
DM and DL are already allocated directly
What are the three things that make up activity based costing
Total overhead
Cost pools: assembly cost, processing order costs,
Cost drivers: # of units, # of orders
How to find the activity rate in activity based costing?
Cost Pool/Cost driver of cost pool
Why is it after tax cost of debt when calculating the WACC?
There is a tax shield because interest is tax deductible
Formula: Pre tax cost of debt * (1-tax rate)