Conceptual Framework, Standards, Standard Setting, and Presentation of FS #2

Question 1

What are the qualitative tests that can be met for an Operating Segment to be considered a Reportable Segment?

Answer 1

• Segment revenue is at least 10% of total revenue of all operating segments
• Operating segment assets are at least 10% of total assets.
• The absolute amount of segment profit/loss is at least 10% of all operating segments with a profit/loss.

Question 2

Regulation S-X

Answer 2

Contains information regarding the FS that must be submitted to the SEC.

Question 3

Regulation S-K

Answer 3

Contains the instructions for filling the non-financial statement forms required by the SEC.

Question 4

How is Form 10-Q filed with the SEC?

Answer 4

This form must be filed electronically on EDGAR unless this filing causes hardship on the filing company.

Question 5

The stated objective of IFRS 1 are to ensure that an entity’s first IFRS FS contain high-quality information that:

Answer 5

Is both transparent for users and comparable over all periods presented and provides a suitable starting point for accounting in accordance with IFRS.

Question 6

What is true about the accrual basis of determining taxable income in relation to the accrual method required by GAAP?

Answer 6

They are, for the most part, the same. An item is included in gross income for the year in which it is earned.

Question 7

For the accrual basis of taxable income, should increases in accounts receivable not be included in gross income?

Answer 7

No; they should be included.

Question 8

What are the IASB’s principal objectives?

Answer 8

• To develop international financial reporting standards
• To promote the use of IFRS
• To take account of financial reporting needs of emerging economies and small and medium-sized entities
• To work toward the convergence of IFRS and national accounting standards.

Question 9

What is the Cash Surrender Value?

Answer 9

It is the current amount available and, therefore, is the current value to be reported on the face of the Personal Statement of Financial Position.
-Check to see if it has already been net of loans.

Question 10

How is Goodwill Impairment treated in the SoCFs?

Answer 10

Is is treated the same as depreciation expense/accumulated depreciation.

Question 11

What is the amort. of a bond discount?

Answer 11

The difference between cash interest and cash expense.

Question 12

What is Treasury Stock’s effect on the BS?

Answer 12

It is NOT as asset and does NOT affect income. It is a contra (negative) element of SE–it decreases total equity.

Question 13

What are the 4 enhancing characteristics?

Answer 13

• Comparability
• Verifiability
• Understandability
• Timliness

Question 14

Disclosure is required by publicly held companies if 10% or more of total revenues are derived from:

Answer 14

• Sales to a single customer, and

- Export sales

Question 15

In personal FS, how should estimated income taxes on the excess of the estimated current values of assets over their tax bases be reported in the Stmt. of Financial Condition?

Answer 15

Between liabilities and new worth.

Question 16

What should disclosures should prospective FS include?

Answer 16

• Summary of significant accounting policies, and

- Summary of significant assumptions

Question 17

Reporting inventory at the lower of cost or market is a departure from the accounting principle of?

Answer 17

Historical Cost.

Question 18

Income tax-basis FS differ from those prepared under GAAP in that income tax-basis FS:

Answer 18

Recognize certain revenues and expenses in different reporting period. Timing is the key difference.

Question 19

Economic Entity Assumption

Answer 19

The presumption that all economic events can be identified with a particular economic entity and that the activities of a company can be distinguished form its owners.

Question 20

Going Concern Assumpiotn

Answer 20

The presumption that a business will continue to operate indefinitely.

Question 21

Periodicity Assumption

Answer 21

Relates to the ability to divide the “life” of a business into shorter, artificial time period for financial reporting purposes.

Question 22

Monetary Unit Assumption

Answer 22

Monetary unit (dollars in the U.S.) is the most appropriate common denominator for measuring, reporting, and analyzing economic activity.

Question 23

A business interest that constitutes a large part of an individuals’s total assets should be presented in a personal statement of financial condition as?

Answer 23

A single amount equal to the estimated current value of the business interest. (p.826)

Question 24

Estimating uncollectible accounts expense using the ratio of past actual losses from uncollectible accounts to the past net credit sales, adjusted for anticipated conditions, is following the practice of?

Answer 24

Matching.

Question 25

In FS using the cash basis of accounting, the cash basis was modified so that an accrual of income taxes was reported. Are these FS in accordance with the modified cash basis of accounting?

Answer 25

Yes.

Question 26

Conceptually, interim FS can be described as emphasizing?

Answer 26

Timeliness over faithful representation.

Question 27

How can forfeited non-vested accounts of an employee benefit play be used?

Answer 27

• To reduce future employer contributions
• For expenses
• To be reallocated to participant’s accounts
  Note: Must be in accordance with plan documents.

Question 28

With respect to the categories of assets, liabilities, and SE presented on the BS, what is a U.S. GAAP and IFRS difference?

Answer 28

IFRS statements may present PP&E first in the balance sheet.

Question 29

What methods are acceptable to report taxable income?

Answer 29

• Cash basis
• Accrual basis
• Thy hybrid method (modified accrual method?)

Question 30

Financial statements serve as:

Answer 30

The primary source for financial information about the entity to the primary users since information cannot be provided directly to these users.

Question 31

In the FSs of employee benefit pension plans and trusts, the plan investments are reported at:

Answer 31

Fair Value