Chapter 1 - Accounting Standards and Conceptual Framework

Question 0

Qualitative Characteristics of Useful Financial Information

Answer 0

Relevance

Faithful Representation

Question 1

Authoritative Literature Included in the FASB Accounting Standards Codification

Answer 1

FASB
Emerging Issues Task Force (EITF)
Derivative Implementation Group Issues
Accounting Principles Board Opinions
Accounting Research Bulletins
Accounting Interpretations
AICPA

Question 2

What makes up “relevant” financial information?

Answer 2

“Passing Confirms Money”
Predictive
Confirming
Materiality

Question 3

What makes financial statements “faithfully represented”?

Answer 3

“Completely neutral is free from error”
Completeness
Neutrality
Freedom from Error

Question 4

What are the enhancing qualitative characteristics?

Answer 4

"Compare & verify in time to understand"
Comparability
Verifiability
Timeliness
Understandability

Question 5

Presentation Order of Major Components of Income and RE Statement

Answer 5

“IDEA”
Reported on Income Statement:
Income from Continuing Operations (before tax)
Income from Discontinued Operations (after tax)
Extraordinary Items (after tax)

Reported on Statement of RE:
Cumulative Effect of Change in Accounting Principle

Question 6

Examples of Discontinued Operations

Answer 6

After tax
Impairment Loss
Gain/Loss from Actual Operations
Gain/Loss on Disposal

Question 7

How to treat anticipated future gains and losses?

Answer 7

Not recognized until they occur

Question 8

Examples of Exit or Disposal Costs

Answer 8

Involuntary Employee Termination Benefits
Costs to Terminate a Contract that is not a Capital Lease
Other costs associated with exit or disposal activities, including costs to consolidate facilities or relocate employees

Question 9

What classifies an item to be “extraordinary”?

Answer 9

Unusual AND Infrequent

Question 10

How to treat material unusual OR infrequent items?

Answer 10

Report as separate line item as part of income from continuing operations (before tax)

Question 11

How are extraordinary items treated under IFRS?

Answer 11

Can’t be presented in statement of comprehensive income or separate income statement, or in notes to financial statements.

*Not reported

Question 12

Treatment of changes in accounting estimates

Answer 12

Prospectively - current and future periods

Question 13

Treatment of changes in accounting principle that is inseparable from change in estimate

Answer 13

Treat as change in estimate

Prospectively - current and future periods

Question 14

Treatment of Changes in Accounting Principle

Answer 14

Retrospectively - prior periods

Adjust beginning RE in earliest period presented

Question 15

Exceptions to Treatment of Changes in Accounting Principles

Answer 15

Effect of change in depreciation methods - Treat as change in estimate
Prospectively - current and future periods

Question 16

Treatment of Changes in Accounting Entity

Answer 16

Restatement to reflect information for new entity

Question 17

Treatment of Error Correction

Answer 17

Restate (prior period adjustment)

Adjust beginning RE of earliest period presented

Question 18

What makes up Other Comprehensive Income?

Answer 18

"PUFER"
Pension Adjustments
Unrealized Gains and Losses
Foreign Currency Items
Effective Portion of Cash Flow Hedges
Revaluation Surplus

Question 19

Quantitative Requirements for Reportable Segments

Answer 19

• 10% “Size” Test (must only meet one)
  
  • Revenue
  • Reported Profit or Loss
  • Assets

*75% “Reporting Sufficiency” Test
- If total external revenue reported is below 75%, additional segments need to be identified as reportable segments even if they don’t meet
the 10% “Size” Test

Question 20

Presentation Requirements for First Time Adopters of IFRS

Answer 20

B/S - 3 years
Comprehensive Income - 2 years
Statement of Cash Flows
Changes in Equity

Question 21

Form 10-K Annual Report Filing Deadlines for:
Large Accelerated Filers
Accelerated Filers
All Others

Answer 21

Large Accelerated Filers - 60 days
Accelerated Filers - 75 days
All Others - 90 days

Question 22

Form 10-Q Quarterly Report Filing Deadlines for:
Large Accelerated Filers
Accelerated Filers
All Others

Answer 22

Large Accelerated Filers - 40 days
Accelerated Filers - 40 days
All Others - 45 days