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FAR > F2 > Flashcards

F2 Flashcards

1
Q

The contents of the Summary of Significant Accounting Policies note to the financial statements.

A

Measurement bases used in preparing the financial statements

Specific accounting policies and methods used

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2
Q

What are the U.S. GAAP disclosure requirements for risks and uncertainties?

A

Nature of operations
Use of estimates in preparing the financial statements
Significant estimates
Current vulnerability due to certain concentrations

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3
Q

What is a subsequent event and what are the two categories of subsequent events?

A

An event or transaction that occurs after the balance sheet date but before the financial statements are issued or are available to be issued

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4
Q

Recognized subsequent events -

A

provide additional information about conditions that existed at the balance sheet date

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5
Q

Nonrecognized subsequent events

A

provide information about conditions that occurred after the balance sheet date and did not exist on the balance sheet date

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6
Q

Fair Value

A

The price to sell an asset or transfer a liability in an orderly transaction between market participants at the measurement date

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7
Q

Valuation techniques that can be used to measure the fair value of an asset or liability

A

Market approach
Income approach
Cost approach

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8
Q

Market Approach

A

Uses price and other relevant information about market transactions involving identical or comparable assets or liabilities to measure fair value

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9
Q

Income approach

A

Converts future amounts, including cash flows or earnings, to a single discounted amount to measure the fair value of assets or liabilities

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10
Q

Cost approach

A

Uses current replacement cost to measure the fair value of assets

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11
Q

Level 1 Input

A

Highest priority

quotes prices in active markets for identical assets or liabilities

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12
Q

Level 2 Input

A

inputs other than quoted market prices that are directly or indirectly observable for an asset or liability

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13
Q

Level 3 Inputs

A

Lowest priority
unobservable inputs for the asset or liability that reflect the entities assumptions and are based on the best available information

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14
Q

Four required disclosures for segments of an enterprise

A

Operating segments
Products and services
Geographic areas
Major customers

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15
Q

10% size test

A

10% of revenue, assets, or profit/loss

If met, reportable segment

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16
Q

75% Test

A

75% of the total consolidate revenue of the entity

Only includes external revenues

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17
Q

Disclosure requirements for reportable operating segments

A 
Must report:
Identifying factors 
Products or services
Profit/loss details
Asset details
Measurement criteria 
Reconciliations
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18
Q

Form 10-K

A

Filed annually

Summary of financial data, MD&A, audited

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19
Q

Form 10-Q

A

Filed quarterly

Unaudited financial statements, interim MD&A, certain disclosures

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20
Q

Form 11-K

A

Employee benefit plans

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21
Q

Form 20-F

A

Non U.S. (10-K) annual report

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22
Q

Form 40-F

A

Canadian (10K) annual report

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23
Q

Form 6-K

A

Similar to 10-Q

filed semiannually by foreign private issuers

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24
Q

Form 8-K

A

Major events

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25
Q

Forms 3, 4, and 5

A

10% ownership files

26
Q

Regulation S-X

A

sets forth the form and content of and requirements for interim and annual financial statements to be filed with the SEC
2 yrs BS
3 yrs IS and Statement of Cash flows

27
Q

Guidelines for interim reporting

A

same accounting principles used in most recent annual report
Allocate expenses to the interim period benefited
Revenues are recognized in the period in which they are earned and realized or realizable
A total for comprehensive income in condensed FS of interim periods

28
Q

General guidelines for OCBOA financial statement presentation:

A

Different titles from accrual basis financial statements
Required financial statements are the equivalent of the accrual basis balance sheet and income statement
Financial statements should explain changes in equity accounts
A statement of cash flows is not required
Disclosures should be similar to GAAP financial statement disclosures

29
Q

Working Capital

A

= Current assets - Current liabilities

30
Q

Current ratio

A

= current assets/current liabilities

31
Q

Quick ratio

A

[Cash and cash equivalents + ST marketable securities + Receivables(Net)]/CL

32
Q

AR Turnover

A

Sales / Avg AR (net)

33
Q

Days Sales in AR

A

Ending AR (net) / [Sales(net)/365]

34
Q

Inventory turnover

A

COGS / Avg. Inv

35
Q

Days in inventory

A

Ending inventory / [COGS/365]

36
Q

AP Turnover

A

COGS / Avg. AP

37
Q

Days of Payables Outstanding

A

Days sales in AR + Days in Inv. - Days of payables outstanding

38
Q

Asset turnover

A

Sales / Avg. Total Assets

39
Q

Profit Margin

A

Net income / Sales

40
Q

ROA

A

Net Income / Avg. total assets

41
Q

Dupont ROA

A

Profit Margin x Asset Turnover

42
Q

Cash Conversion Cycle

A

Days sales in AR + Days in inv. - Days of payables outstanding

43
Q

Return on Equity

A

Net Income / Avg. Total Equity

44
Q

Return on Sales

A

Income before int. income, int. exp., taxes / Sales(net)

45
Q

Gross (Profit) Margin

A

Cash flows from ops / Current liabilities

46
Q

Debt-to-Equity

A

Total liabilities / Total equity

47
Q

Total Debt Ratio

A

Total liabilities/Total Assets

48
Q

Equity Multiplier

A

Total Assets / Total Equity

49
Q

Times Interest Earned

A

Income before int. exp. & taxes / Int. Exp

50
Q

EPS

A

Income available to common shareholders / weighted avg. common shares outstanding

51
Q

Price earnings ratio

A

Price per share / Basic earnings per share

52
Q

Dividend payout

A

cash dividends / Net Income

53
Q

Working Capital

A

CA - CL

54
Q

Working Capital Turnover

A

Sales / Avg. Working Capital

55
Q

In creating a new partnership interest with an investment of additional capital, what three methods can be used?

A

Exact method
Bonus method
Goodwill method

56
Q

Exact method (partnerships)

A

The purchase price equals the BV of the capital account purchased
No adjustment to the existing partners’ capital accounts
No goodwill or bonus

57
Q

Bonus method (partnerships)

A

New partner’s capital account = (A + B + C) x C’s percentage ownership
Excess of new partner’s contribution over capital interest received is a bonus to old partners
Excess of capital interest received over new partners contributions is a bonus to the new partner

58
Q

Goodwill method (partnerships)

A

Goodwill is recognized based on the total value of the partnership by the new partner’s contribution
Goodwill is shared by the existing partners using the agreed profit/loss ratio

59
Q

Bonus method (withdrawal of partner)

A

The difference between the balance of the withdrawing partner’s capital account and the amount that person is paid is the amount of the bonus
The bonus is allocated among the remaining partners’ capital accounts in accordance with their remaining profit and loss ratios

60
Q

Goodwill method of withdrawal of a partner

A

The partner may elect to record the implied goodwill in the partnership based on the payment to the withdrawing partners. The amount of the implied goodwill is allocated to all of the partners in accordance with their profit and loss ratios
After allocating goodwill, the balance in the withdrawing partners’ capital account should equal the final distribution to the withdrawing partner

61
Q

In liquidating a partnership, what is the order of preference?

A
  1. creditors
  2. loans and advances to partners
  3. capital accounts to partners
    All losses must be provided for before disposal, that is, maximum potential losses before distribution of cash

FAR (3 decks)

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