Deck 3

Question 1

What type of cash flow statement includes capital financing activites?

Answer 1

propriety fund financials of a government

Question 2

what is the functional currency of an entity?

Answer 2

1) local curreny
2) primarily generates and expends cash
3) currency in which the statements will be presented usually parent or a foreign currency that does not include the place the books are

Question 3

what makes an investment dillutive?

Answer 3

if the excercise price is less than the average market price add the shares to the bottom fraction of dillutive EPS calculation

Question 4

when do R&D expenses become capitalized?

Answer 4

expense them up until tech feasibility is established then capitilize costs.

Question 5

what do stock splits and stock dividends require?

Answer 5

retrospective application as if they occured at beginning of period

Question 6

when is an ARO recorded as a libility?

Answer 6

when it is put into service

Question 7

What is the rule for R& D expenses?

Answer 7

expensed as incurred unless:

1) they are costs to be reimbursed by another company
2) they are costs for a long lived tangible asset for alternative use

Question 8

what is considered other financial sources for capital projects funds?

Answer 8

Transfers
&
Proceeds

Question 9

when the cost method for acquiring treasury stock is used, how is common stock reported on the balance sheet?

Answer 9

total number of shares issued at par value

Question 10

what is avoidable interst?

Answer 10

The potential amount to be capitalized. Comapre this amount to actual interst and take lesser of two for interest cap.

Question 11

how are R&D expenses treated if there is a futre alternate use?

Answer 11

only expense those that have no fututre alternate use. if there is an alternate use, capitalize and depriatiate the asset

Question 12

when equipment is purchased in the general fund, what is the journal entry?

Answer 12

Expenditure x

Voucher payable x

Question 13

what focus do government-wide financial statements follow?

Answer 13

accrual accounting-economic resosourse measurement

Question 14

what is the journal entry for a purchase order for supplies?

Answer 14

encumberance x

budgetary control x

Question 15

what are debenture bonds?

Answer 15

unsecured bonds

Question 16

how is a noninterest bearing note recorded?

Answer 16

present value of prevailing market rate

Question 17

if 50% of customers take 2% discount what percentage is reported for the uncollectable allowance?

Answer 17

1% half of 2%

Question 18

3 enhancing qualities

Answer 18

verify
consistency
compare
timliness

Question 19

how should intangible assets be amortized?

Answer 19

lesser of legal life or useful economic life remaining

Question 20

how is amortization different for a finance lease?

Answer 20

for a finance lease-economic life of asset when a BPO exists or when transfer of ownership. If this is not met use asset life

when 75 or 90% criteria is met, amortize over lease term

Question 21

how are common stock and APIC used to account in a translation?

Answer 21

historical exchange rate

Question 22

what is the rate to use in a lease?

Answer 22

use the rate known in the lease, if not known use incremental borrowing rate

Question 23

what is inter period equity for governmental units?

Answer 23

helps users assess if current year revenues will cover current year expenses a balanced budget helps

Question 24

what do R&D expenses include?

Answer 24

costs incurred before tech feasibilty is expensed.
costs for internal use are not R&D
market research is not included if it does not aim to discover new knowledge or to develop a new product/service

Question 25

when is goodwill expensed or capitalized

Answer 25

expensed-costs to maintain or develop goodwill

capitalized-when incurred in purchase of a business

Question 26

what is a short-term lease for government?

Answer 26

less than 12 months in term length

Question 27

how does a stock divided affect retained earnings?

Answer 27

a stock dividend that is less than 20-25% has no effect on total stockholders equity but decreases retained earnings.

Question 28

what is the “balance sheet” formula for fiduciary net position?

Answer 28

resources owned/ assets and deffered outflows –resources owed/deffered inflows and liabilities

Question 29

why would nonmonetary transactions of common stock for productive assets not be included in comprehensive income?

Answer 29

This is considered an owner transaction therefore is not part of comprehensive income(NI +OCI)

Question 30

how is a gain and asset recorded if a transaction lacks commercial substance and cash is RECEIVED(must be less than 25% for partial gain recognition)?

Answer 30

Cash (amount received)
new asset(plug)
old asset(at book value)
gain( old fair value-old book value * cash received/fair value)