Conceptual Framework, Standard-Setting, and Financial Reporting

Question 1

What is included in Other Comprehensive Income on the income statement?

Answer 1

OCI includes foreign currency translation adjustments AND unrealized holding gains/losses on available-for-sale debt securities.

Question 2

What is the purpose of SFAC 4?

Answer 2

To provide a basis for establishing detailed accounting and reporting standards for nonbusiness entities.

Question 3

What statement shows the net asset reclassifications of an NFP?

Answer 3

Statement of Activities

Question 4

Does consolidated retained earnings include the subsidiary’s retained earnings?

Answer 4

No; conslidated retained earnings includes only the parent’s ret. earnings.

Question 5

Quick Ratio

Answer 5

Current assets (excluding inventory & prepaid assets) / Current Liabilities

Question 6

What amounts are required as supplemental disclosures in the statement of cash flows?

Answer 6

Regardless of either method, 1) income taxes paid & 2) Interest paid must be disclosed.

Question 7

How many days after fiscal year-end is an accelerated filer required to file Form 10-K & 10-Q with the SEC?

Answer 7

75 days and 40 days after year-end.

Question 8

Cash basis income is:

Answer 8

Higher when A/R decreases (overstatement); Lower when accrued expenses decrease (understatement)

Question 9

Large Accelerated Filer

Answer 9

A company with a public float of $700 million or more and filing Form 10-K within 60 days of fiscal year-end

Question 10

What are the components of relevance?

Answer 10

Predictive value, confirmatory value and materiality

Question 11

Two fundamental charcteristics of FASB framework?

Answer 11

Relevance and Faithful Representation

Question 12

Four enhancing characteristics of FASB Framework?

Answer 12

Verifiability, Comparability Understandability & Timeliness

Question 13

Are a sub’s dividends included in consolidated retained earnings?

Answer 13

NO - the consolidated retained earnings include only the parent company’s retained earnings! It will however decrease noncontrolling interest

Question 14

What is the appropriate characterization of the net assets of a nongovernmental NFP?

Answer 14

The net assets of a nongovernmental NFP are classified as “residual interest.” For a public business, it would be ownership interest.

Question 15

What is consolidated stockholders’ equity comprised of?

Answer 15

Total equity of the parent + NCI of the sub (i.e. sub’s stockholder’s equity multiplied by NCI %)

Question 16

A non-accelerated filer is defined as having a public float of less than what amount in $?

Answer 16

$75 million