F2 Flashcards
I am a STAR =
Identify the contract w customer
Separate performance obligations
Transaction price determination
Allocate price to each PO
Recognize revenue
What happens during a change in accounting ESTIMATE?
- it’s not an error
- don’t restate PYs
- prospective
- Includes TO LIFO and Deprecition Method
Change in accounting estimate - prospective or retrospective
Prospective
Change in accounting principle - prospective or retrospective? And what are the exceptions
- Retrospective - adjust beginning RE as far back as you have FS presented
- To LIFO and depreciation method
A change in accounting principle that is inseparable from a change in estimate is actually a..
Change in accounting estimate
Whenever it is impossible to determine whether a change in accounting estimate or a change in accounting principle has occurred, the change should be considered..
A change in accounting estimate
For sake of the CPA exam, changing from Cash basis to Accrual basis is a..
Correction of an error because Cash basis is not allowed by GAAP
When accounting for correction of an error, the cumulative effect should reflect the (blank) in CY FS
The carrying amounts of assets and liabilities as of beginning of that year
When measuring FV of an asset, does the value include transaction and transportation costs?
NOT transaction costs
May include transportation costs if location is an attribute
What are the 3 techniques for measuring FV?
Market approach
income approach
cost approach
Most common question asked with the topic “summary of signficant accounting policies”
Determining which investments are treated as cash equivalents. Key word is “policy” when asked this question
OCBOA financial statements cannot use what titles
Accrual basis FS titles (no GAAP like titles)
Horizontal v vertical:
Which is useful in evaluating trends and material changes?
Horizontal
Horizontal v vertical:
Which is useful in comparing period-to-period and comparing to other entities?
Vertical
do g/l from treasury stock transactions affect RE and net income?
Only affects RE, not NI
The issuance of a liquidating dividend will effect which accounts for JE
Cr cash, debit APIC for liquidating portion and rest to RE
What is a noncurrent asset?
When something is expected to result in the realization of cash in the future. Must be beyond the CY
What is BINS and DO?
Bank collections +
Interest income +
NSF checks -
Service charge -
Deposits in transit +
Outstanding checks -
T/F: The purchase from a foreign source for an amount different from fair value is not a foreign currency transaction.
True
Which inventory valuation method best reflects the actual inventory value in a year?
Dollar value LIFO
A high AR turnover ratio indicates that:
Customers are paying quicker
How is quick ratio different than current ratio?
It doesn’t include all current assets. It excludes inventories and prepaids
Are nonoperating g/l included in comprehensive income?
Yes
