Day 6 Flashcards
When changing from FIFO to Weighed Average where is the accounting change reported?
The accounting principal change is shown as an adjustment to beginning RE
MCQ-00063
When changing from Weighted Average inventory to LIFO where is the change reported?
It is impractical to report this change
MCQ-00219
When do FS need to be corrected?
When there is an Accounting Error
MCQ-08233
When do FS require retroactive treatment?
When they are presented in comparative form. Prior periods need to be corrected
MCQ-00226
A bookkeeper forgot to record depreciation expense of $10k in year 1, this error was caught in year 2. What amount of depreciation expense should be reported in year 2 FS?
$10k
The error should be reported as a period period adjustment to RE
MCQ-06956
If Ending Inventory is overstated by $30k what does it imply?
COGS is understated by the same amount
MCQ-11127
What is the most authoritative source of US GAAP?
FASB Accounting Standards Codification
MCQ-06063
How are amendments incorporated into the FASB Accounting Standards Codification?
By releasing an Accounting Standards Update
MCQ-08738
What are the classifications of Other Comprehensive Income?
PUFI
- Pension Adjustments
- Unrealized Gains & Losses (Available-for-Sale debt Securities)
- Foreign Currency
- Instrument Specific Credit Risk
OCI gets closed out to Accumulated OCI and will eventually be taken out and reported in regular Net Income when ready
How is Other Comprehensive Income reported?
- Single- Statement Approach - reported below Net Income
- Two-Statement Approach - reported on a separate stmt
Revenue Recognition: 5-Step Approach
ISTAR
- Identify the contract with the customer
- Identify the Separate Performance Obligations
- Transaction Price
- Allocate transaction price to separate performance obligations
- Recognize Revenue
Comprehensive Income includes ________ but excludes transactions __________
Includes Net Income but excludes transactions with owners such as Dividends or Stock Purchases
Rule: *Comprehensive Income is the change in Equity (net assets) from transactions from NON-OWNER sources.
It includes all changes in Equity except those from Investments & Distributions to owners*
MCQ-05079
True or False: According to FASB, comprehensive income includes Loss on discontinued operations
True
MCQ-00101
Where is Accumulated Other Comprehensive Income reported? Which Stmt?
it is reported in the Stockholders’ Equity section of the Balance Sheet
MCQ-05929
When are Revenues recognized vs Expenses?
Revenues should be recognized in the period in which they are Earned and Realized or Realizable
Expenses are recognized when an entity’s Economic Benefits are used up in delivering/producing goods
MCQ-04680
