Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

Becker FAR > becker far 1 > Flashcards

becker far 1 Flashcards

1
Q

Name the single source of authoritative nongovernmental US Gaap

A

The FASB “Accounting Standards Codification” ASC

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

The term “international financial reporting standards” includes what standards?

A

International Accounting Standards IAS
International Financial Reporting Standards IFRS
IFRIC Interpretations
SIC Interpretations

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

Who are the primary users of general purpose financial reports?

A

Existing & potential: Investors, Lenders, other creditors

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

Name the pervasive constraint on the information provided in financial reporting.

A

Cost Constraint:
The benefits of reporting financial information must be greater than the costs of obtaining and presenting the information.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

Name the fundamental qualitative characteristics of useful financial information.

A

Relevance & Faithful Representation

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

Name the 3 elements of relevance

A

Predictive Value
Confirming Value
Materiality

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

Name the 3 elements of faithful representation

A

Neutrality
Completeness
Freedom from Error

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

Name the enhancing qualitative characteristics of financial information

A

Comparability
Verifiability
Timeliness
Understandability

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

According to SFAC No 5, what should a full set of financial statements include?

A 
Statement of Financial Position (balance sheet)
Statement of Earnings (income statement)
Statement of Comprehensive Income
Statement of Cash Flows
Statement of Changes in Owners Equity
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

What is the difference between realization & recognition?

A

Realization when sold and converted into cash (or claims to cash)
Recognition when recorded in the financial statments

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

`List the 10 elements of financial statments

A 
assets
liabilities
owners equity (of net assets)
expense 
revenues
comprehensive income
gains
losses
investments by owners
distributions to owners
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

List the 6 elements of financial statements according to the IASB Framework

A 
assets
liabilities
equity
income (revenue & gains)
expenses (expenses & losses)
capital maintenance adjustments
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

Name the 5 elements of present value measurement per SFAC No 7

A 
Estimate of future cash flows
Expectations about timing variations of future cash flows
Time value of money (the risk free rate of interest)
The price for bearing uncertainty
Other factors (eg liquidity issues & market imperfections)
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

Describe the expected cash flow approach for present value computations

A

Considers a range of possible cash flows & assigns a (subjective) probability to each cash flow in the range to determine the weighted average, or “expected” future cash flow

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

What is the presentation order of the major components of an income and retained earnings statement?

A

Income statement:
Income (or loss) from continuing operations
Income (or loss) from discontinued operations
Extraordinary Items

Retained Earnings Statement:
Cumulative effect of a change in accounting principle

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

The gain (loss) from discontinued operations can consist of…

A

An impairment loss, a gain (loss) from actual operations, and a gain (loss) on disposal.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

In what period are the following reported:
an impairment loss?
a gain (loss) from actual operations?
a gain (loss) on disposal?

A

All are reported in the period in which they occur

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

In reported discontinued operations, how is a component of an entity defined under US GAAP & IFRS?

A

US GAAP:

  1. An operating segment
  2. A reportable segment
  3. A reporting unit
  4. A subsidiary
  5. An asset group

IFRS: 1. A separate major line of business or geographical area of operations
2. a subsidiary acquired exclusively w/ a view to resale

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

how do we account for subsequent increases in the fair value of a discontinued component?

A

A gain is recognized for the subsequent increase in fair value minus costs to sell (but not in excess of the previously recognized cumulative loss). The gain is reported in the period of increase.

20
Q

what types of costs are associated w exit & disposal activities?

A

Involuntary employee termination benefits
Costs to terminate a contract that isn’t a capital lease
Other costs associated w exit or disposal activities

21
Q

Name 3 types of accounting changes

A

Change in accounting estimate, principle, entity

22
Q

how is a change in accounting principle reported?

A

cumulative effect of change is included in the retained earnings statement as an adjustment of the beginning retained earnings balance of the earliest year presented

Prior period financial statements are restated, if presented

23
Q

What are the special changes in an accounting principle?

How are they reported?

A

A change to LIFO from another method of inventory pricing under US GAAP.

Any other changes in which a cumulative effect adjustment is considered impractical to calculate.

Special changes are reported prospectively (like a change in estimate)

24
Q

How is a change in an accounting estimate reported?

A

Prospectively

The effect is shown in the current and/or future periods that are affected by the change.

Financial statements are not restated.

25
Q

Under US GAAP, how is a change in the accounting entity reported?

A

All current & prior period financial statements presented are restated.

26
Q

How are error corrections reported?

A

Reported as prior period adjustments to retained earnings and all comparative financial statements presented are restated

27
Q

Define comprehensive income

A

Change in equity (net assets) that results from revenue, expenses, gains, and losses during a period, as well as any other recognized changes in equity that occur for reasons other than investment by owners & distributions to owners.

28
Q

Identify 5 items included in other comprehensive income:

A

PUFER

Pension adjustments
Unrealized gains and losses
Foreign Currency Items
Effective Portion of Cash flow hedges
Revaluation Surplus (IFRS only)
29
Q

List 2 formats acceptable for reporting comprehensive income.
How does this compare w IFRS?

A

Statement of Comprehensive income (singe statement approach)
Statement of Income followed by separate Statement of Comprehensive Income (2 stmt approach)

US GAAP & IFRS both allow the same 2 presentations

30
Q

List some disclosure requirements for comprehensive income

A

Tax effects of each component included in current “other comprehensive income”

Changes in the accumulated balances of components of “other comprehensive income”

Total accumulated other comprehensive income

Reclassification adjustments between other comprehensive income and net income.

31
Q

Identify the contents of the Summary of Significant Accounting Policies note to the financial statements

A 
Identify & describe:
Measurement bases used in preparing the financial statement
Accounting Principles methods
Criteria
Policies
Pricing
32
Q

Describe the related party disclosures required under US GAAP & IFRS

A

Material related party transactions
Related party notes/accounts receivable
Control relationships

Note: IFRS requires disclosure of key mgmt. compensation. US GAAP doesn’t require this disclosre.

33
Q

What are the US GAAP disclosure requirements for risks & uncertainties?

A

nature of operations

use of estimates in preparing financial statements

significant estimates

current vulnerability due to certain concentrations

34
Q

What are the guidelines for interim reporting?

A

Use the same accounting principles that were used in the most recent annual report

Allocate expenses to the interim period benefited

Revenues are recognized in period which they are earned and realized or realizable

A total for comprehensive income in condensed financial statements of interim periods.

35
Q

What income tax rate is used in interim financial reporting?

A

Use best estimate of effective tax rate to be applicable for full fiscal year on quarterly statements

36
Q

Name the 4 required disclosures for segments of an enterprise

A
  1. Operating segments (annual & interim)
  2. Products & services
  3. Geographic areas
  4. Major customers
37
Q

define Operating Segment

A

Distinct revenue producing components of the enterprise about which separate financial information is produced internally and whose operating results are regularly reviewed by the enterprise.

Determined using a “management approach”

38
Q

Name 2 quantitative thresholds used in identifying reportable operating segments

A

10% size test

75% reporting sufficiency test

39
Q

Describe the 10% test for identifying reportable segments

A

Revenue: Reported revenue, inc. sales to external customers & intersegment sales or transfers, is 10% or more of combined revenue, internal + external, of all operating segments.

Reported Profit or Loss; The absolute amount of its reported profit or loss is 10% or more of greater of:
Combined reported profit of all operating segments that did not report a loss
Combined reported loss of all operating segments that did report a loss

Assets: 10% or more o all combined assets of all op. segments.

40
Q

What is the 75% test for identifying reportable segments?

A

Combined external (consolidated) revenue of all reportable segments must be at least 75% of the total consolidated revenue of the entity

The practical limit is 10 segments, but this is not a precise limit

41
Q

what are the disclosure requirements for reportable operating segments?

A 
For each reportable segment, entity must report:
Identifying factors
Products or services
Profit or loss details
Asset details
Liability details (IFRS only)
measurement criteria
Reconciliations
42
Q

define development stage enterprise

A

Enterprise that devotes substantially all of its efforts to establishing a new business and either planned principal operations have not commenced or no significant revenue has been generated therefrom

43
Q

Indicate any special accounting treatment for development state enterprises

A

Same generally accepted acct princ. as established operating enterprises w/ additional disclosures:

Identify stmts as those of a development stage ent.

Accumulated losses identified as deficit accum. during development stage

Income statement: show rev & expenses, & cumulative total of both amts from company inception

Statement of Cash flows: include cumulative amounts of cash inflow & outflows from enterprise inception & current amount of cash inflows/outflows for each period presented.

Issue separate stmt of stockholders equity, indicating shares issued, date of issuance, dollar amts assigned and noncash consideration

44
Q

What is the date of an entity’s transition to IFRS?

A

The date of the opening balance sheet

45
Q

Desribe form 10-K & form 10-Q.

What level of assurance must be provided w/ the financial statements submitted in these forms?

A

10-K: Filed annually by US Registered companies. Includes summary of financial data, MD & A. & audited financial statements prepared using US GAAP

10-Q: Quarterly. Includes unaudited (reviewed) financial statement, interim MD+A, & certain disclosures

Becker FAR (2 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions