Conceptual Framework, Standard-Setting, and Financial Reporting

Question 1

How are all expenses reported on the statement of activities by a not-for-profit are reported?

Answer 1

they all are reported as decreases in net assets without donor restrictions.

Question 2

What is an e.g of a transaction that is in part an exchange and in part a contribution?

Answer 2

when fair value exceeds the amount the party is paying.

Question 3

Financial statements may be prepared using a comprehensive basis of accounting other than generally accepted accounting principles (often referred to as a special purpose framework)

Answer 3

Cash basis
Tax basis
Regulatory basis
Contractual basis
Other basis - uses a definite set of logical, reasonable criteria that is applied to all material items appearing in financial statements.

Question 4

Not-for-profit entities must disclose what types of donor restrictions.

Answer 4

support for a particular operating activity, investment for a specified term, use in a specified period, and/or acquisition of long-lived assets.

Question 5

Securities of a subsidiary that are convertible into parent company’s stock shall be considered:

Answer 5

Securities of a subsidiary that are convertible into parent company’s common stock are potential common shares for diluted EPS.

Question 6

What is the maximum number of days after the company’s fiscal year-end that the company has to file Form 10-K with the SEC?

Answer 6

Annual 10-K reports are due within 75 days for fiscal years for accelerated filers. The requirement is 90 days for other filers. The deadline for filing quarterly reports (10-Q) is 40 days for accelerated filers.

Question 7

How should plan investments be reported in a defined benefit plan’s financial statements?

Answer 7

an employee benefit plan report its net assets at fair value.

Question 8

What is earnings per share?

Answer 8

Basic earnings per share (EPS) is net income divided by weighted-average common stock outstanding (WACSO). Net income must be reduced by preferred cumulative dividends.

Question 9

Statement of Financial Accounting Concepts 8 (SFAC 8), Chapter 8, relates to:

Answer 9

Notes to Financial Statements. Issued in 2018, provides guidance regarding relevant supplemental

Question 10

Which statement is correct regarding reporting comprehensive income?

Answer 10

Accumulated other comprehensive income is reported in the stockholders’ equity section of the balance sheet.

Question 11

what are the qualitative characteristics of accounting information?

Answer 11

The fundamental qualitative characteristics of accounting information are relevance and faithful representation.

Question 12

What qualitative characteristics enhance the usefulness of information that is relevant and faithfully represented?

Answer 12

Comparability, verifiability, timeliness, and understandability

Question 13

The FASB requires that ?

Answer 13

all items that are recognized as components of comprehensive income be reported in a financial statement that has the same prominence as other financial statements.
However, the FASB does not prescribe a specific format for the display of such information.

Question 14

Supporting services have several functional subclassifications:

Answer 14

management and general expenses, fundraising expenses (including the cost for the annual fundraising dinner), and membership development.

Question 15

Program service expenses are those expenses associated with the mission of the entity;

Answer 15

e.g salary paid to a program director, printing cost incurred to create educational fliers on the prevention of illness, and cost incurred to advertise the programs of the organization

Question 16

The statement of comprehensive income includes:

Answer 16

all revenues and expenses contained in the income statement/statement of profit and loss. Consequently, it would include sales revenue but would not include investments or distributions by owners or deferred revenue.

Question 17

Exercise of options and warrants is assumed at the beginning of the period:

Answer 17

Proceeds are assumed used to purchase common stock at the average market price during the period. The incremental shares are included in the denominator of diluted earnings per share (EPS).

Question 18

The four assumptions that underlie GAAP are the economic entity assumption

Answer 18

(1) the going concern assumption, (2) the periodicity assumption, and (3) the monetary unit assumption, (4) The economic entity assumption

Question 19

Interim financial statements emphasize

Answer 19

timeliness over faithful representation.