Day 7 - FS Disclosures

Question 1

Who are the primary users of general purpose financial reports?

Answer 1

• Investors
• Lenders
• Other Creditors

Flashcards

Question 2

What is included in a full set of FS?

Answer 2

• Stmt of Financial Position (Balance Sheet)
• Stmt of Earnings (Income Stmt)
• Stmt of Comprehensive Income
• Stmt of Cash Flows
• Stmt of Changes in Owners’ Equity

Flashcards

Question 3

Five elements of Present Value Measurement per SFAC No. 7

EVTUO

Answer 3

• Estimate of future cash flow
• Expectations about timing Variations of future cash flows
• Time value of money (Risk-Free rate of interest)
• The price for bearing Uncertainty
• Other factors (e.g., liquidity issues and market imperfections)

Flashcards

Question 4

What is an example of information that should be disclosed in the summary of significant accounting policies?

Answer 4

Criteria for determining which investments are treated as cash equivalents

MCQ-00103

Question 5

Examples of disclosure requirements related to risks and uncertainties under US GAAP:

Answer 5

1. Disclosure of significant estimates when it is probable that the estimate will change in the near future when the effect of the change is material
   2 Disclosure of an entity’s major products/services and its principle markets
2. Disclosure of the use of estimates in the preparation of FS
3. Disclosure of concentrations when it is reasonably possible that a concentration could cause a severe impact

MCQ-06073

Question 6

Examples of required disclosures in the footnotes of FS:

Answer 6

1. Material Info. regarding the Company’s reported inventory
2. Gross unrealized gains/losses on the Company’s marketable securities
3. Descriptions of the Company’s pension plans

Note: Excerpts from the minutes of a board of directors is not included

MCQ-04776

Question 7

When is Disclosure of vulnerability to concentration requried:

Answer 7

1. The concentration exists as of the FS date
2. The concentration makes the entity vulnerable to the risk of a near-term severe impact
3. It is at least reasonably possible that the events that could cause a severe impact from vulnerability will occur in the near-term

Note: the concentration pertains to a specific geographic region is not required to be disclosed

MCQ-04787

Question 8

When should an entity not recognize subsequent events?

Answer 8

Should not recognize subsequent events in the FS that provide information about events that did not exist at the FS date

EX: The only manufacturing plant was burned down in year 2 = disclose plat was burned down but do not recognize loss on year 1 FS

MCQ-08719

Question 9

Rule: “Reasonably Possible”

Answer 9

Rule: Only footnote disclosure is required for a “reasonably possible” loss

MCQ-00916

Question 10

For the purposes of determining the period over which subsequent events must be evaluated, FS are considered to be “Issued” when:

Answer 10

1. The FS are in the form and format that comply with GAAP
2. the FS have been widely distributed to FS users

MCQ-04872

Question 11

For the purposes of determining the period over which subsequent events must be evaluated, FS are considered to be “available to be issued” when:

Answer 11

1. The FS are in the form and format that comply with GAAP
2. All approvals necessary for the issuance of the FS have been received

MCQ-04871

Question 12

Name the 4 required disclosures for segments of an enterprise:

Answer 12

1. Operating Segments
2. Products and Services
3. Geographic Areas
4. Major Customers

Flashcards