CPA FAR Section 1 Conceptual Framework

Question 1

Financial Capital is applied to

Answer 1

Currently Reported Net Income and Comprehensive Income

Question 2

SFAC 4 provides

Answer 2

Basis for establishing detailed accounting / reporting standards for nonbusiness entities

Question 3

Declines in inventory not expected to reverse should; expected to reverse

Answer 3

Lower in Q by amount of decline and raise in later Q by amount of decline; don’t report if temporary in nature

Question 4

Basic Earnings Per Share Formula

Answer 4

Net Income - Dividends on Preferred Stock / Weighted Average Common Stock Outstanding

Question 5

Assets / Liabilities of discontinued operations can not be reported as …? Where?

Answer 5

Single or net amount ; Balance Sheet

Question 6

Contributed services should be recorded as ; repairs reported as

Answer 6

Increase in Contributions ; Increase in Expenses

Question 7

When is a company required to present balance sheets on Form 10-Q (assuming not subject to seasonal fluctuations)?

Answer 7

Most recent quarter-end and end of preceding fiscal year

Question 8

Nongovernmental not for profit organizations must report expenses as

Answer 8

Both Functional and Natural

Question 9

Primary purpose of statement of activities for a nongovernmental not for profit is

Answer 9

To report the change in net assets for the period

Question 10

Most important objectives of financial reporting by state and local government are

Answer 10

Accountability & Interperiod Equity

Question 11

6 basic characteristics of effective financial reporting are

Answer 11

Reliability, Consistency, Comparability, Understandability, Relevance, Timeliness

Question 12

3 primary groups of primary users of governmental financial reports:

Answer 12

Citizens, Legislative and Oversight Boards, Investors - Creditors

Question 13

Governmental Funds Include

Answer 13

Special Revenue, Capital Project, General, Permanent, Debt Service

Question 14

Governmental Fund Basis & Focus

Answer 14

Modified Accrual & Current Resource Measurement Focus

Question 15

Proprietary Fund Basis & Focus

Answer 15

Full Accrual & Economic resources measurement focus

Question 16

Fiduciary Fund Basis & Focus

Answer 16

Full Accrual & Economic resources measurement focus

Question 17

Proprietary Funds Include

Answer 17

Internal Service & Enterprise

Question 18

Fiduciary Funds Include

Answer 18

Custodial, Investment Trust, Private Purpose Trust, Pension Trust

Question 19

In modified accrual basis of accounting, revenues are recognized when they are

Answer 19

Measurable and Available

Question 20

In full accrual accounting, revenues are recognized when they are

Answer 20

Measurable and Earned

Question 21

Amount set to the side for purpose of beginning budgeting process

Answer 21

Appropriations

Question 22

Amount from appropriations currently tied up in actual purchase, purchase order issued

Answer 22

Encumbrances

Question 23

Amount that has been filled and amount actually been spent, order filled and reverses encumbrances

Answer 23

Expenditures

Question 24

Governmental term for accounts payable

Answer 24

Voucher Payable

Question 25

3 types of leases for a lessee (tenant)

Answer 25

Short-term, Operating, Finance

Question 26

3 types of lease for lessor (landlord-person giving lease option)

Answer 26

Operating, Sales Type, Direct Financing

Question 27

Interest payments on mortgage notes belongs to the

Answer 27

Operating Section

Question 28

Payments to retire mortgage notes & dividend payments belongs to the

Answer 28

Financing Section

Question 29

Amortization of bond discounts belongs to

Answer 29

Operating Section

Question 30

Convertible Bonds do not affect; used to compute what

Answer 30

Basic earnings per share; used to compute diluted earnings per share

Question 31

Accumulated other comprehensive income is reported in

Answer 31

The statement of financial position (balance sheet)

Question 32

What has an effect on excess revenues over expenditures?

Answer 32

Purchase of fixed assets

Question 33

A special tax levy to retire and pay interest on general obligation bonds should be recorded in a

Answer 33

Debt Service Fund

Question 34

Most significant characteristic in classifying activities of enterprise fund

Answer 34

Pricing policies of the activity establish fees and charges designed to recover cost

Question 35

Comprehensive income formula

Answer 35

NI - Unrealized loss (1- Tax rate) + unrealized gain (1- tax rate) = CI

Question 36

Contributions ______ ; distributions ________

Answer 36

Increase stockholders equity : Decrease stockholders equity

Question 37

Net income on the ________ become _________ on the _________

Answer 37

Income statement ; Retained earnings ; statement of stockholders equity

Question 38

Net income becomes _______ which becomes ________ and goes to _______

Answer 38

Retained earnings ; dividends ; investors

Question 39

Dividends received goes to ; dividends paid goes to

Answer 39

Operating ; Financing

Question 40

4 aspects to income statement

Answer 40

Revenues - expenses + gains - losses

Question 41

Comprehensive income goes through _______ which goes to the ___________

Answer 41

Equity ; Balance sheet

Question 42

Diluted EPS Formula

Answer 42

Net income / (Weighted average common shares + diluted potential common shares)