F1

Question 1

Comprehensive income includes:

Answer 1

all changes in equity during a period except those resulting from owner investments and distributions to owners

Question 2

unrealized gain on available for sale debt security is reported in

Answer 2

other comprehensive income

Question 3

The earliest period that a component of an entity can be reported in discontinued operations is when the component meets the following “held for sale” criteria:

Answer 3

1 Management commits to a plan to sell the component.
2 The component is available for immediate sale in its present condition.
3 An active program to locate a buyer has been initiated.
4 The sale of the component is probable and the sale is expected to be completed within one year.
5 The sale of the component is being actively marketed.
6 It is unlikely that significant change to the plan to sell will be made or that the plan will be withdrawn.

Question 4

Discontinued operations is shown

Answer 4

net of tax

Question 5

The company has the choice of reporting the components of OCI on either an:

Answer 5

individual net of tax basis or each component on a before tax basis with one amount shown after for the aggregate tax effects

Question 6

What is an 8-K

Answer 6

is a form required to be filed by all companies registered with the Securities and Exchange Commission (SEC). The form reports on major corporate events, including corporate asset acquisitions/disposals, accountant changes, financial statement changes, management changes, changes in securities, etc.

Question 7

Stock dividends and stock splits require

Answer 7

restatement of the shares outstanding before the stock dividend or stock split. Thus, the stock dividend would be treated as if it had occurred at the beginning of the fiscal year.

Question 8

When calculating basic earnings per share, preferred dividends

Answer 8

accumulated during the period on cumulative preferred stock or preferred dividends declared during the period on noncumulative preferred stock must be subtracted from net income to calculate the income available to common shareholders, which is then divided by the average common shares outstanding.

Question 9

basic EPS formula

Answer 9

income available to common shareholders / weighted average number of common shares

Question 10

out of money stock option

Answer 10

are antidilutive because the exrcise price exceeds the market price of the stock

Question 11

An accelerated filer must file 10-k within

Answer 11

75 days

Question 12

preferred shares are NOT

Answer 12

included in the EPS calculation

Question 13

Rule: all potentially dilutive convertible bonds and preferred stock

Answer 13

are used in computing diluted EPS

Question 14

Cumulative preferred stock dividends are

Answer 14

• paid on par value (not sale price) of preferred stock
  -have a preference over common stock dividends until all past P/S div is paid

Question 15

Gains of stock issuance are record by

Answer 15

increasing APIC

Question 16

Losses from stock issuance/reissuance are recorded by

Answer 16

first eliminating any balance in APIC and then decreasing R/E

Question 17

Contingent shares (if dilutive) are:

Answer 17

Included in the calculation of basic EPS if all conditions are met.

Question 18

When computing discontinued operations you include: (for year when discontinued operations hasn’t sold)

Answer 18

1. Loss from operations
   2 Impairment loss (BV - FV)

Question 19

If a company operates in an industry that is not subject to seasonal fluctuations which balance sheet periods are required to be included on the Form 10-Q?

Answer 19

1. the most recent quarter
2. The end of the preceding fiscal year

Question 20

Treasury stock gain does not mean

Answer 20

Treasury Stock - APIC
it means gain on income statement- which you never put TS gain or losses on IS

Question 21

Additional Shares Outstanding Formula

Answer 21

Number of Shares - (Number of Shares x Exercise Price / Average Market Price)

Question 22

The treasury stock method assumes that options proceeds can be used to:

Answer 22

reacquire new shares on the open market

Question 23

Rule:The difference between book value and fair market value of the property dividend should be

Answer 23

recorded as gain/loss on disposal of asset.

Question 24

when a stock dividend happens (less than 20-25% of stock outstanding) transfer the

Answer 24

FMV of the stock dividend at declaration date from R/E to C/S and PIC

Question 25

Gains and losses from changes in fair value of foreign currency transaction hedges classified as fair value hedges are accounted for

Answer 25

in earnings as are other fair value type hedges.

Question 26

Gains and losses from changes in the fair value of foreign currency transaction hedges used to hedge a net investment in a foreign operation are reported in

Answer 26

other comprehensive income as part of the cumulative transaction adjustment.

Question 27

If certain natural disasters are frequent then :

Answer 27

the damage is not considered unusual and damages should be shown in continuing operations with no disclosure needed

Question 28

Dividend income is included in:

Answer 28

continuing operations section of Income statement

Question 29

A foreign receivable will generate a foreign exchange gain when :

Answer 29

The foreign currency increases in value

Question 30

A foreign currency payable will generate a foreign exchange gain when:

Answer 30

The foreign currency decreases in value.

Question 31

Does common stock and APIC increase whenever a company issue rights without consideration to existing shareholders?

Answer 31

No, common and APIC only increase whenever the right are exercised and stock is issued.

Question 32

Interest expense (net of income tax) on debt considered would be added back to the numerator for diluted EPS if

Answer 32

the effects are dilutive.

Question 33

a stock split increases

Answer 33

the number of shares

Question 34

whenever a firm repurchases common stock, what happens to the debt to total capital ratio?

Answer 34

It increase’s

Question 35

preferred stock that is nonconvertible is

Answer 35

not considered in the calculation of eps

Question 36

stock dividend -

Answer 36

distributions to stockholders of the corporations own authorized but unissued shares.

Question 37

When a stock dividend is declared it is

Answer 37

transferred from retained earnings to capital stock and apic accounts AT fair value

Question 38

stock splits

Answer 38

has no change to total value of equity only the number of common stock shares
so if you do 2-for-1 stock split
its the 2x100000= 200000 common stock

when calculating the new par value use par value not the fv

Question 39

all deferred tax liabilities are classified as

Answer 39

non-current liabilities

Question 40

purpose of comprehensive income is to

Answer 40

summarize all changes in equity from nonowner sources

Question 41

stock dividends and stock splits are NOT considered

Answer 41

income to the recipient

Question 42

When stock is donated does it decrease stockholder equity

Answer 42

no because there is no cost to the corporation

Question 43

The difference between book value and fair market value of the property dividend should be recorded as a

Answer 43

gain/loss on disposal of asset.