Day 25 Flashcards
What is the difference between Authorized, issued, and outstanding shares?
Authorized - total number of shares the company is allowed to issue
Issued - total number of shares ACTUALLY issued
Outstanding - total issued shares IN THE HANDS OF SHAREHOLDERS
Cash provided from Operating Activities is computed as:
Net Income
PLUS Depr Exp
LESS Gain on Sale of Equipment
PLUS Loss on Sale of Equipment
= Cash from Operating Activities
MCQ-01234
How are deferred tax assets and Liabilities reported on the BS?
As NON-CURRENT
MCQ-00847
When must a Filler and a Non-Filer evaluate subsequent events for their FS?
A Filer must consider subsequent events up to the Issue Date (FS are widely distributed to users)
A Non-Filer must consider subsequent events up to the date the FS are Available (the date FS are available to be issued)
MCQ-04880
ABC was sued for $50k and accrued the liability on Year 1. In year 2 ABC received a favorable judgement and the plaintiff was required to pay ABC $30k of expenses. The case is being appealed what amount is reported as an asset and liability?
$0 & $0
Contingent gain is not reported
The $50k loss is no longer probable and not reported
MCQ-00764
ABC changed it’s inventory from LIFO to FIFO, how is this reported?
Accounting Principle Change - Retrospectively
Report the cumulative effect of the change as an adjustment to beginning Retained Earnings, net of tax
MCQ-05068
Conditions to capitalize interest:
- Expenditures for building have been made
- Interest cost are being incurred
- Permits have been filled
All 3 have to be met
MCQ-01896
MCQ-00113
Lower of cost definitions
ABC has 3,000 $100 par value 5% preferred stock at the end of year 1. In year 2 ABC did not declare a dividend. In year 3 a $10k cash dividend was paid. ABC should report dividends in arrears on the FS as?
$20k disclosure
Dividends are not reported as a liability until they are DECLARED
MCQ-01561
During an acquisition how are acquisition costs treated?
They are expensed immediately
What is the formula for the Dividends Payout Ratio
Dividends per Share / EPS
In preparing its interim FS, assuming that no changes in acctg principle were implemented, ABC would apply GAAP:
Used in the most recent annual report
If an Acctg Principle was changed ABC would not use GAAP
MCQ-04466
When preparing Interim FS, income tax expense is _______ using the _______ tax rate _______ to apply to the entire year.
When preparing Interim FS, income tax expense is estimated using the EFFECTIVE tax rate expected to apply to the entire year.
MCQ-05464
Bonus Method - Recognize Intercapital Transfer Rules:
- Determine total Capital and Interest to the new partner
- If Interest is LESS THAN amount $contributed$ = Bonus to Old Partners
- If Interest is MORE THAN amount $contributed$ = Bonus to New Partner
B = Bonus = Balance in total capital account determines allocation
MCQ-00872
For a NFP, they received $200k with donor restrictions with specific requirements to acquire property. Where is this reported on the Stmt of Cash Flows?
Financing Activities
If you take out a loan to buy a Bldg, what is the loan? Financing Activities
MCQ-01255
What contributed services are NFP required to report?
SOME
Specialized skills are required and possessed by donor
Otherwise needed by the organization
Measurable
Easily (at fair value)
MCQ-08714
The excess of an Assets fair value over its book value is:
Amortized over the life of the asset
Additional amortization causes the Investor’s share of the Investee’s Net Income to DECREASE
MCQ-00288
ABC estimates that 4% of sales for the warranty period. Total sales were $3 million and warranty costs incurred were $67,500. What amount should ABC report as warranty expense on its Income Statement?
3,000,000 × .04 = $120,000 = Warranty Expense
$120,000 - $67,500 = $52,500 Accrued Warranty
The entire liability for the warranty should be accrued in the year of sale to “match” the cost with the corresponding revenue
MCQ-01034
An investor in CS received dividends in excess of the investor’s share of the investee’s earnings subsequent to the date of the investment. How will the investor’s investment account be affected by the dividends under the Fair Value and Equity Method?
Decrease and Decrease
Rule: Liquidating dividends reduce the carrying amount of the investment account under both methods
MCQ-00353
For NFP - Barriers that indicate a Conditional Contribution include:
- Specific levels of service
- Specific outputs or outcomes
- Matching
- Outside event
MCQ-15553
Pass Key: When preparing land for the construction of a building
Land Costs = Filling a hole and leveling
Building Costs = Digging a hole
MCQ-11089
Using the direct write off method to account for Uncollectible AR. Cash collections equal sales adjusted for the deduction of what accounts?
- Accounts written off
- Increase in AR Balance deduction
MCQ-00269
