F1 - Income Statement Flashcards

1
Q

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

A

IDEA:
I - Income (Loss) from Continuing Operations
D - Discontinued Operations Income (Loss)
E - Extraordinary Items
A - Accounting Principle Change

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2
Q

What is included in inventory costs?

A

Purchase price, freight in

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3
Q

What is included in selling expense?

A

Freight out, salaries and commissions, advertising

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4
Q

What is included in general & administrative costs?

A

Officer’s salaries, accounting and legal, insurance

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5
Q

What is included in non-operating expenses?

A

Auxiliary activities, interest expense from other activities

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6
Q

Under US GAAP, what is a component of an entity?

A
OR RAGS:
O - operating segment
R - reportable segment
R - reporting unit
AG - asset group
S - subsidiary
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7
Q

Under IFRS, what is a component of an entity?

A

MLB/GA or SFS:
MLB - major line of business
GA - geographical area
SFS - subsidiary for sale

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8
Q

Management should believe that a component will sell within how long from the time the plan to sell is initiated?

A

One year

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9
Q

T/F : Components may be fair valued above amounts previously impaired

A

False. The gains cannot exceed the amount for which the component has been impaired

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10
Q

T/F : If the component is determined to be held for sale in December, the income (loss) for the entire year is included in income (loss) from discontinued operations

A

True. The component is considered discontinued the for the entire year, no matter when it is determined to be held for sale

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11
Q

Define directly related in terms of discontinued operations

A

1) has a cause-effect relationship

2) occurs no later than one year from disposal

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12
Q

What are the criteria for liability recognition for disposal activities?

A

OPA:
O - obligating event has occurred
P - payment of obligation is required
A - avoidance of payment is not possible

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13
Q

Questions to answer in notes about component disposal:

A

Why its being done
How much it will cost
What it has cost to date
How long it will take

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14
Q

Under US GAAP, an extraordinary item is defined as:

A

Unusual in nature AND infrequent in occurance

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15
Q

Under IFRS, an extraordinary item is defined as:

A

No extraordinary items under IFRS

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16
Q

Changes in accounting estimates are accounted for:

A

Prospectively

17
Q

Changes in accounting principle are accounted for:

A

Retrospectively (except changing to LIFO or for changes in depreciation method)

18
Q

Changes in accounting entity are accounted for:

A

Restatement (US GAAP only; IFRS has no concept)

19
Q

Changes in accounting errors are accounted for:

A

Restatement (adjust earliest R/E beginning balance)