Deck 2

Question 1

SEC Minimum F/S disclosures

Answer 1

2yrs: B/S
3yrs: I/S and SOCF

Question 2

Correction of an error is called what?

Answer 2

“Restatement” (eg. counterbalancing or inventory error)

Requires a prior period adjustment or a counterbalance

Question 3

Changes in DEP/AMM/DEPLETION are

Answer 3

Changes in accounting estimate

**However they require “change in principle” disclosures

Question 4

FV/FMV

Answer 4

NOT:when or how

but rather:how much $
(Estimation of future cash flows
 Expected cash flows from different timing and amt
 Time value of money
 Inherently uncertain assets/liabilities
 and more!!!!)

Question 5

Primary objective of accounting

Answer 5

Income measurement/Determination

Question 6

What is a subsequent event?

Answer 6

After B/S date, before F/S published
Recognized: an issue at at B/S date
Unrecognized: NOT an issue by the B/S date

Question 7

Financial forecasts limited or general use

Answer 7

BOTH

Question 8

Term Vs Serial Bonds

Answer 8

Term: Matures at a specific date
Serial: Matures at MULTIPLE dates (annuity)

Question 9

Major difference between Cost and Par for T/S

Answer 9

Cost: Recognizes G/L at Re-sale of T/S
Par: Recognizes G/L at Purchase of T/S

Question 10

Specific identification definition and Je’s

Answer 10

Once individual item is sold, report it directly to COGS
Je’s:
Dr: COGS
CR: Inventory (for the specific item)

Question 11

Name the inventory types (and the two subs)

Answer 11

1. Specific identification
2. Weighted average:
   Periodic (Simple average)
   Perpetual (Moving average)
3. FIFO
4. LIFO

Question 12

Differences between Periodic W/A

Perpetual W/A

Answer 12

Periodic: Measured at the end of the period/yr
Add up Purchases add up number of items,
and divide. this number is the amount per item
Perpetual: measured at every purchase/Sale
Add up purchases to the point, divide by number of items to that point. upon sale, multiply number of units sold by the Moving average up to that point.

Question 13

1. LIFO/FIFO Periodic/perpetual/both?

2. If both is either the same under both methods? which?

Answer 13

1. Both LIFO and FIFO can be periodic or perpetual

2. FIFOis the same under both methods

Question 14

1. W/A # of Shares outstanding are divided by or multiplied when? (hint: Tricky)
2. what do you do if there are comparative F/S

Answer 14

1. Stock Dividends and Stock Splits

2. If a stock Dividend or a Stock Split AND comparative F/S, Restate the previus statments retroactivly

Question 15

Revenue recognition for R&D uses what method?

Answer 15

The Milestone Method for Revenue recognition: Revenue is recorded when certain contingent milestone requirements are met.

Question 16

OCI goes in which F/S and which part?

Answer 16

Stockholders equity account in the B/S

Question 17

Types (attributes) of Preferred Stock

Answer 17

1. Participating
2. Cumulative
3. Convertible
4. Callable

Question 18

Stock subscription journal entries

Answer 18

Dr. Cash
Dr. Sub Receivable
Cr. C/S Subscribed
Cr. APIC

@ Payment
Dr. Cash
Cr. Subscriptions Receivable

@ Full payment
Dr. Cash
Dr. C/S Subscribed (full amount)
   Cr. Sub Receivable
   Cr. Common Stock

Question 19

Market Rate:

• Real
• Yield
• YTM
• Effective

Answer 19

Contract Rate:

• Coupon
• Stated
• Bond
• Face
• Nominal

Question 20

ALL EPS MUST BE PUT ON THE F/S:
I*
Dis
Extra
\_\_\_\_
NI*

Answer 20

Must be shown on the face of the I/S:
I
NI

May be shown on either face or notes:
Dis
Extra