CPA FAR Section 1 Conceptual Framework Flashcards
Financial Capital is applied to
Currently Reported Net Income and Comprehensive Income
SFAC 4 provides
Basis for establishing detailed accounting / reporting standards for nonbusiness entities
Declines in inventory not expected to reverse should; expected to reverse
Lower in Q by amount of decline and raise in later Q by amount of decline; don’t report if temporary in nature
Basic Earnings Per Share Formula
Net Income - Dividends on Preferred Stock / Weighted Average Common Stock Outstanding
Assets / Liabilities of discontinued operations can not be reported as …? Where?
Single or net amount ; Balance Sheet
Contributed services should be recorded as ; repairs reported as
Increase in Contributions ; Increase in Expenses
When is a company required to present balance sheets on Form 10-Q (assuming not subject to seasonal fluctuations)?
Most recent quarter-end and end of preceding fiscal year
Nongovernmental not for profit organizations must report expenses as
Both Functional and Natural
Primary purpose of statement of activities for a nongovernmental not for profit is
To report the change in net assets for the period
Most important objectives of financial reporting by state and local government are
Accountability & Interperiod Equity
6 basic characteristics of effective financial reporting are
Reliability, Consistency, Comparability, Understandability, Relevance, Timeliness
3 primary groups of primary users of governmental financial reports:
Citizens, Legislative and Oversight Boards, Investors - Creditors
Governmental Funds Include
Special Revenue, Capital Project, General, Permanent, Debt Service
Governmental Fund Basis & Focus
Modified Accrual & Current Resource Measurement Focus
Proprietary Fund Basis & Focus
Full Accrual & Economic resources measurement focus
Fiduciary Fund Basis & Focus
Full Accrual & Economic resources measurement focus
Proprietary Funds Include
Internal Service & Enterprise
Fiduciary Funds Include
Custodial, Investment Trust, Private Purpose Trust, Pension Trust
In modified accrual basis of accounting, revenues are recognized when they are
Measurable and Available
In full accrual accounting, revenues are recognized when they are
Measurable and Earned
Amount set to the side for purpose of beginning budgeting process
Appropriations
Amount from appropriations currently tied up in actual purchase, purchase order issued
Encumbrances
Amount that has been filled and amount actually been spent, order filled and reverses encumbrances
Expenditures
Governmental term for accounts payable
Voucher Payable
3 types of leases for a lessee (tenant)
Short-term, Operating, Finance
3 types of lease for lessor (landlord-person giving lease option)
Operating, Sales Type, Direct Financing
Interest payments on mortgage notes belongs to the
Operating Section
Payments to retire mortgage notes & dividend payments belongs to the
Financing Section
Amortization of bond discounts belongs to
Operating Section
Convertible Bonds do not affect; used to compute what
Basic earnings per share; used to compute diluted earnings per share
Accumulated other comprehensive income is reported in
The statement of financial position (balance sheet)
What has an effect on excess revenues over expenditures?
Purchase of fixed assets
A special tax levy to retire and pay interest on general obligation bonds should be recorded in a
Debt Service Fund
Most significant characteristic in classifying activities of enterprise fund
Pricing policies of the activity establish fees and charges designed to recover cost
Comprehensive income formula
NI - Unrealized loss (1- Tax rate) + unrealized gain (1- tax rate) = CI
Contributions ______ ; distributions ________
Increase stockholders equity : Decrease stockholders equity
Net income on the ________ become _________ on the _________
Income statement ; Retained earnings ; statement of stockholders equity
Net income becomes _______ which becomes ________ and goes to _______
Retained earnings ; dividends ; investors
Dividends received goes to ; dividends paid goes to
Operating ; Financing
4 aspects to income statement
Revenues - expenses + gains - losses
Comprehensive income goes through _______ which goes to the ___________
Equity ; Balance sheet
Diluted EPS Formula
Net income / (Weighted average common shares + diluted potential common shares)