F1 Flashcards

1
Q

What four situations require adjusting JE in order to properly present FS on accrual basis?

A
  1. Cash is received before the performance obligation is met (Deferred revenues)
  2. Cash is paid before the expense is incurred (prepaid expenses)
  3. Cash is received after the performance obligation has been met (receivables)
  4. Cash is paid after the expense has been incurred (accrued expenses)
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2
Q

What is the JE to record the earning of deferred revenue?

A

Deferred Revenue xxx

Revenue xxx

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3
Q

What are the three rules for recording adjusting JE

A
  1. Adjusting JE must be recorded by end of entity fiscal year before the preparation of FS
  2. Adjusting JE NEVER involve the cash account.
  3. All adjusting entries will hit one income sttement account and one BS account
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4
Q

Define comprehensive income

A

Change in equity (net assets) that results from transactions and other events and circumstances from nonowner sources

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5
Q

Identify 6 items in OCI

A
  1. Pension adjustments
  2. Unrealized G/L on available-for-sale debt securities
  3. Foreign currency translation adjustments
  4. Instrument-specific credit risk for liabilities (using FV)
  5. Effective portion of CF hedges
  6. Revaluation surpluses (IFRS ONLY)
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6
Q

What are the two formats of reporting comprehensive income

A

Statement of comprehensive income (single statement approach)
Statement of income followed by separate statement of comprehensive income ( 2 statement approach)
GAAP AND IFRS allows both

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7
Q

In reporting discontinued operations, how is a component of an entity defined under GAAP and IFRD

A
  1. An operating segment
  2. A reportable segment
  3. reporting unit
  4. subsidiary
  5. asset group
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8
Q

What conditions must be present for a disposal to be reported in discontinued operation?

A

Disposal represents a strategic shift that has/will have a major effect on an entity’s operations and financial results

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9
Q

How is a change in an accounting estimate reported?

A

Prospectively

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10
Q

Special exceptions to general rule for reporting of changes in an accounting principle?

A

Change to LIFO - Prospectively

Change in depreciation method - Prospectively

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11
Q

How are error corrections reported?

A

Reported as prior period adjustments to RE and all comparative FS presented are restated

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