F1

Question 0

What is the presentation order of the major components of the income and retained earnings statement? IDEA

Answer 0

Income statement - income(loss) from continuing ops, income (loss) from discontinued ops, extra ordinary items / retained earnings stmnt - cumulative effect of a change in accounting principle

Question 1

Name the single source of authoritative nongovernmental US GAAP

Answer 1

The FASB “accounting standards codification” (ASC)

Question 2

The term international financial reporting stds includes which stds?

Answer 2

International accounting stds (IAS) / international financial reporting stds (IFRS) / IFRIC interpretations / SIC interpretations

Question 3

The gain (loss) from discontinued ops can consist of…

Answer 3

An impairment loss, a gain(loss) from actual ops, and a gain(loss) from disposal

Question 4

Who are the primary users of general purpose financial reports?

Answer 4

Existing and potential investors, lenders, other creditors

Question 5

In what period are the following reported: an impairment loss? A gain(loss) from actual operations? A gain(loss) on disposal?

Answer 5

All are reported in the period in which they occur.

Question 6

Name the persuasive constraints on the information provided in financial reporting?

Answer 6

Cost constraint : the benefit of reporting financial information must be greater than the costs of obtaining and presenting the information.

Question 7

In reporting discontinued ops how is a “component” of an entity defined under US GAAP & IFRS?

Answer 7

US GAAP - 1. An operating segment 2. A reportable segment 3. A reporting unit 4. A subsidiary 5. An asset group

IFRS- 1. A separate major line of business or geographical area of operations 2. A subsidiary acquired exclusively with a view to resale

Question 8

Name the fundamental qualitative characteristics of useful financial information

Answer 8

Relevance & Faithful representation

Question 9

How do we account for subsequent increases in the fair value of a discontinued ops?

Answer 9

A gain is recognized for the subsequent increase in fair value minus costs to sell(but not in excess of the previously recognized cumulative loss) the gain is reported in the period of increase.

Question 10

Name the three elements of relevance

Answer 10

Predictive value, confirming value, and materiality

Question 11

What type of costs are associated with exit and disposal activities?

Answer 11

Involuntary employee termination benefits, costs to terminate a contract that is not a capital lease, other costs associated with exit or disposal activities

Question 12

Name the three elements of faithful representation

Answer 12

Neutrality completeness and freedom from error

Question 13

Define extraordinary items

Answer 13

Material in nature, of a character significantly different from the typical, not expected to happen again . UNUSUAL & INFREQUENT . Remember: extraordinary items are not allowed under IFRS

Question 14

Name the enhancing characteristics of financial information

Answer 14

Understandability, comparability, timeliness, verifiability

Question 15

List some examples of extraordinary items

Answer 15

The abandonment of or damage to a plant due to infrequent earthquake/flood, an expropriation of a plant by the govt, a prohibition of a product line by a newly enacted law/regulation

Question 16

According to Sfac no 5 what should a full set of financial statements include?

Answer 16

Statement of financial position (balance sheet), statement of earnings (income statement), statement of comprehensive income, statement of cash flows, and statement of changes in owners equity

Question 17

Name the three types of accounting changes

Answer 17

Change in an accounting principle, change in accounting estimate, and change in accounting entity

Question 18

What is the difference between realization and recognition

Answer 18

Realization : when sold and converted to cash (or claims to cash) / Recognition: when recorded in the financial statements

Question 19

How is a change in accounting principle reported?

Answer 19

Cumulative effect of change is included in the retained earnings statement as an adjustment of the beginning retained earnings balance of the earliest year presented. Prior periods financial statements are restated if presented.

Question 20

List the 10 elements of financial statements according to SFAC NO. 6 CREG & LALEID

Answer 20

Comprehensive income, revenues, expenses, gains & losses, assets, liabilities, equity(of net assets) investment by owners and distributions by owners.

Question 21

What are the special changes in an accounting principle? How are special changes in accounting principle reported?

Answer 21

A change to LIFO from another method of inventory pricing under US GAAP. / Any other change in which a cumulative effect adjustment is considered impractical to calculate. Special changes are reported prospectively like a change in estimate.

Question 22

List the six elements of financial statements according to the IASB framework

Answer 22

Asset, liabilities, equity, income (revenue & gains), expenses(expenses & losses), capital maintenance adjustments

Question 23

How is a change in accounting estimate reported?

Answer 23

Prospectively - the effect is shown in the current & or future periods that are affected by the change. Financial statements are not restated

Question 24

Name the five elements of present valuation measurements per Sfac No. 7 EVTUO

Answer 24

Estimate of future cash flow, expectations about timing variation of future cash flows, time value of money (the risk free rate of interest) the price for bearing uncertainty, other factors (liquidity issues and market imperfections)

Question 25

Under US GAAP how is a change in the accounting entity reported?

Answer 25

All current & prior periods financial statements presented are restated

Question 26

Describe the expected cash flow approach for present value computations

Answer 26

Considers a range of possible cash flows and assigns a (subjective) probability to each cash flow in the range to determine the weighted average or "expected" future cash flows

Question 27

How are error corrections reported?

Answer 27

Reported as prior period adjustments to retained earnings and all comparative financial statements presented are restated.

Question 28

Define comprehensive income.

Answer 28

Changes in equity (net assets) that result from revenue, expenses, gains, and losses during a period as well as any other recognized changes in equity that occur for reasons other than investment by owners and distributions to owners.

Question 29

Identify five items included in other comprehensive income PUFER

Answer 29

Pension adjustments, unreleased gains and losses on AFS securities, foreign currency translation adjustments and gains & losses on foreign currency transactions that are designated as economic hedges of a net investment in a foreign entity, effective portion of a cash flow hedge, revaluation surplus (IFRS only)

Question 30

List the two formats acceptable for reporting comprehensive income. How does this compare with IFRS?

Answer 30

Statement of comprehensive income(single statement approach) / Statement of income followed by separate statement of comprehensive income (two statement approach) US GAAP & IFRS both allow the same two presentations

Question 31

List some disclosure requirements for comprehensive income

Answer 31

Tax effect of each component included in OCI. Changes in the accumulated balances of components of OCI. Total accumulated OCI. Reclassification adjustments between OCI and net income.

Question 32

Identify the contents of the summary of significant accounting policies note to the financial statements

Answer 32

Summary of significant accounting policies - ID and describe measurement bases used in preparing financial statements, principles and methods, criteria, policies and pricing

Question 33

Describe the related party disclosures required under US GAAP and IFRS

Answer 33

Material related party transactions, related party notes/accounts receivable, control relationships. Note: IFRS requires disclosure of key management compensation. US GAAP does not require this disclosure

Question 34

What are the US GAAP disclosure requirements for risks and uncertainties?

Answer 34

Nature of operations, use of estimates in preparing the financial statements, significant estimates, current vulnerability due to certain concentrations

Question 35

What are the guidelines for interim reprinting?

Answer 35

Use same principles that were used in the most recent annual report, allocate expenses to the interim periods benefited, revenues are recognized in the period in which they are earned and realized or realizable, a total for comprehensive income in condensed financial statements of interim periods

Question 36

What income tax rate is used in interim financial reporting?

Answer 36

Use best estimate of effective tax rate to be applicable for full fiscal year on quarterly statements

Question 37

Name the four required disclosures for segments of an enterprise

Answer 37

Operating segment, product and services, geographic areas, major customers

Question 38

Define operating segments

Answer 38

Distinct revenue producing components of the enterprise about which separate financial information is produced internally and whose operating results are regularly reviewed by the enterprise. Determined using a "management approach"

Question 39

Name the quantitative threshold used in identifying reportable operating segments

Answer 39

10% size test, 75% "reporting sufficency" test

Question 40

Describe the 10% test for identifying reportable segments

Answer 40

Revenue reported revenue including both sales to external customers and inter segment sales or transfers is 10% or more of the combined revenue, internal or external of all operating segments. Reported profit or loss the absolute amount of its P&L is 10% or more of the greater, Assets. Only need to meet one requirement.

Question 41

What is the 75% test for ID reportable segments?

Answer 41

Combined external (consolidated) revenue of all reportable segments must be 75% of the total consolidated revenue of the entity. The practical limit is 10 segments but this is not a precise limit.

Question 42

What are the disclosure requirements for reportable operating segments?

Answer 42

For each reportable segment entity must report identifying factors, products or services, profit or loss details, asset details, liabilities (IFRS) only, measurement criteria and reconciliation

Question 43

Define development stage enterprises

Answer 43

Enterprises that devote substantially all of its efforts to establishing a new business and either planned operations have not commenced or no significant revenue has been generated therefrom.

Question 44

Indicate any special accounting treatment for development stage enterprises

Answer 44

Same GAAP as established. Accumulated losses, cumulative amounts. Issue separate statement of stockholders equity

Question 45

What is the date of an entity's transition to IFRS?

Answer 45

The date of the opening balance sheet

Question 46

Describe the form 10K and 10Q what level of assurance must be provided with the financial statements submitted in these forms.

Answer 46

Form 10k - filed annually and audited | Form 10Q - filed quarterly and reviewed.