Brainscape's Knowledge GenomeTM


Top Flashcards (Certified)
All Flashcards

FAR > F3 > Flashcards

F3 Flashcards

(74 cards)

Start Studying
1
Q

What is the definition of cash and cash equivilant

A

short term, highly liquid investments that are both readily convertable 90 days or less from date of purchase

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

What is the difference between restrcted and unrestricted cash

A

restricted cash is cash that is being set aside for a specific use or purpose while unrestricted cash is just there to be used in general operations

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q 
During a reconciliation from Bank to GL what is added/subtracted
Deposits in transit
Outstanding Checks
Service Charges
Bank Collections
Errors 
NSF funds
Interest income
A 
ADD: Deposits in transit LESS: Outstanding Checks
LESS: Service Charges
ADD: Bank Collections
EITHER: Errors 
DEDUCT: NSF funds
ADD: Interest income
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

When you are asked to list the cash or cash equivalents, and have a negative amount in one bank and postiive in another, how do you handle it? What if they are at the same bank

A

if they are in seperate banks, one will be cash, they negative amount will be a liability.

If they are at the same bank they can be netted

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

What are the two types of accounting for write offs and the related journal entries for actaully writing stuff off

A

Direct write off: Not GAAP
D: Bad Debt Expense C: AR

Allowance Method: GAAP
D: Allowance for uncollectible accounts
C: AR

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

Using the Allowance Method give two journal entries to provide for and then to write off an uncollectable account

A

Provide For/initial entry:
D: Bad DEbt Expense
C: Allowance for doubtful accounts

Write off:
D: Allowance for uncollectable accounts
C: AR

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

What value should non-interest bearing promissory note be recorded

A

at the PV of all future payments, payments should be discounted at market interest rate

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

Notes can be disocunted with or without recourse what is the difference

A

Discounting with recourse means the holder remains contingently liable

Discounting without recourse means the holder assumes no further liability after discounting

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

What are the 4 steps to discounting a note

A
  1. compute maturity value
  2. compute the ‘discount’
  3. get proceeds by subtracting discount from the maturity value
  4. compute interest income as the difference between proceeds and face of the note
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

When does the title of goods pass for each of the following
FOB destination
FOB shipping point
combined goods

A

FOB Destination-When received by the buyer
FOB shipping point-When given to UPS
Consigned Goods: when sold to a third party by consignee

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

How is NRV calculated in the lower of cost and NRV method

A

NRV = Net Selling Price MINUS completion and disposal costs

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

What is the difference between perpetual and periodic inventory methods

A

Periodic: determined by physical count, and Ending Inventory is acutally counted and priced

Perpetual: Inventory is updated for each purchase and for each sale, a running balance is constantly tracked

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

In periods of rising prices, what is the effect on the value on inventory using LIFO instead of FIFO, which of these is prohibited by IFRS

A

Both Ending inventory and Net income will be lower in times of rising prices when using LIFO

LIFO is also not allowed using IFRS.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

How is fixed-asset carrying value computed under GAAP and IFRS

A

Carrying Value = Historical Cost - Accumulated Depreciation - Impairment

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

Give examples of costs to be capitalized as land

A

acquisition price
closing costs such as broker commissions, legal fees, and title insurance
any mortgages
preparation costs such as surveying costs

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

What is the proper accounting treatment for ordinary versus extraordinary repairs

A

ordinary repairs are expensed as repair and maintenance

extra ordinary repairs extend the products life or utility of the asset, and is recorded by accumulated depreciation. If it increases the utility, it is capitalized

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

What is the difference between depreciation under IFRS and US GAAP

A

IFRS: depreciation method should match the expected pattern of fixed asset consumption, and component depreciation is required (both are not required under GAAP)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

How do you compute the sum of the years digits method of depreciation

A

(Cost - Salvage) x (Years remaining) / (Sum of Years)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

How do you compute the Double Declining Balance method of depreciation

A

2 x Straightline rate x NBV of asset

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
20
Q

How do you compute the sum of the Units of Production method of depreciation

A

(Cost - Salvage) / Estimate hours x Actual hours for the period

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
21
Q

State the rules for computing depletion on natural resources

“Remember its REAL property”

A

Residual Value (subtract
Extraction/development cost
Anticipatied restoration cost
Land purchase price

depletion = ((Cost of Land + Extraction cost + Anticipated restoration cost-Residual value) / Estimated Recoverable units ) x Units extracted

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
22
Q

How are trade discounts applied, combined or sequentially

A

Sequentially, like if they say discounts of 40% and 10%, multiply by the 40% and then that result by 10%

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
23
Q

What kind of account is allowance for uncollectable account

A

Contra Asset

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
24
Q

How do you find the NRV of AR

A

Gross AR LESS Allowance

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
25
How do you record amount paid on a previously written off account under the Direct Write Off Method
D:Cash C: Uncollectable Accounts REcovered (this is a revenue account)
26
How do you record amount paid on a previously written off account under the Allowance Method
2 part: D: AR C: Allowance for uncollectable account THEN D: Cash C: AR
27
What is factoring
its where my business sells our AR to a third party right now for cash. and the third party goes out to collect. If it is with recourse, the third party can come back to me and say fuck you they never paid. BUT if non recourse then the third party cant do shit if they have a loss by no payment
28
Whats the JE on a non-recourse factor
D: Cash D: Due from factor (may not get) D: Loss on sale of receivable C: AR
29
What is pledging
Your AR is held as collateral in return of a loan
30
How do you find the face value of a note receivable? What about the maturity value
Face value = principle | Maturity Value = Principle + Interest
31
Inventory Is USUALLY kept at cost, except for these two things which are carried at NRV
Precious Metals and Farm Products
32
When do we use Lower of Cost and NRV
IFRS, and FIFO and Weighted Average
33
When do you use Lower Cost or Market
GAAP only, LIFO or Retail
34
In the lower cost or market method, think about Ken Smiths box, how do yu know what market price to use, and then what do you do with that number
Middle Value between Replacement Cost, NRV (which is Net Selling Price MINUS Cost to Complete), and NRV - Profit THEN once you have the middle number, take the lower of the market and the cost
35
Under the periodic inventory system, what is the huge formula using ending inventory, cogs and all that shit
``` Beg Inv + Purchases =COGS available for sale - Ending Inv =COGS ```
36
Under Periodic inventory how many JE's are recorded during a sale? How does that differ from what is recorded during a perpetual method sale
under periodic you literally just do D: Cash and C: Sales, but under Perpetual, you do D:Cash and C: Sales AND recognize COGS through D:COGS and C: Inventory
37
Under US GAAP does your cost flow assumption need to match the relation inventory count?
NO
38
Under what inventory method is the Ending Inventory and COGS the same for perpetual and periodic method
FIFO YO
39
Weighted average method relates to what? and Moving average relates to what
Weighted average relates to Periodic, and Moving average relates to perpetual
40
There is a method called Dollar-Valiue LIFO, what is the Price Index Equation? How do you use that equation to find what is purchased in order to find Ending Inventory
You find PRice Index by doing (Ending Inventory at current year cost / Ending Inventory at base year cost) and take that Price Index multiplied by the Base Year Layer (addition) and that is added to the beginning amount to find the Ending Inventory
41
When is the GRoss Profit method of inventory evaluation used? How do you use it?
it is used during quarterly or interim reporting. You take the Gross Profit % and do 1-% to find COGS and then use the Inventory Equation to find the Ending inventory
42
What are the two methods of valuing PPE in IFRS
Cost Model (like the US) and Revaluation Model
43
What is the equation for the Cost Model of valuation of PPE
Historical Cost - Acc. Depreciation - Impairment
44
What is the equation for the Revaluation Model of valuation of PPE
Fair Value at Revaluation date - Subsequent accumulated depreciation - subsequent impairment
45
What are the 2 main rules concerning capitalized interest
1. only capitalized interest on the monet actually spent not the total amount borrowed 2. the amount of capitalized interest is the lower of the actual interest incurred or the computed capitalized interest
46
What are the two rules to ACTUALLY BE ABLE TO CAPITALIZE INTEREST
has to be DURING THE TERM OF CONSTRUCTION AND MONEY HAS TO HAVE BEEN SPENT
47
What do you capitalize for an asset
all necesarry costs to put an asset in place, that improve quality, efficiency, or capacity
48
If you dispose of an asset which is part of a group or composite is there a gain or loss?
NOOOOOO, you record accumulated depreciation in the JE instead
49
What is the general equation for finding the sum of the years digits amount which is used as the denominator in the depreciation expense formula of sum of years digits method
N * (N +1) / 2 where N is the estimated useful life
50
What is the firmula for the depreciation expense of sum of years digits method
(Cost - Salvage) x ((Remaining Life of asset) / Sum of years digit figure))
51
What are the two parts of the units of production depreciation method
part 1: (Cost - Salvage) / Estimated units or hours = rate per unit or hour Part 2: Rate per unit or hour x number of units produced or hours worded = depreciation expense
52
Declining Balance Method depreciation expense equation
2 x (1/N) x (Cost -Accumulated Depreciation)
53
When doing double declining balance method, what is NOT included in the computation
dont consider salvage value
54
IF you see the words 'future cash flows will significantly change" what will there be what? and does the transaction have commercial substance?
a gain or loss! and yes there is SUBSTANCEEE
55
If something is lacking commercial substance, what is not expected to change
projected cash flows arent projected to change
56
if something is exchanged lacking commercial substance what is step 1 and step 2 to seeing if a gain is recognized
step 1: FV old - BV Old = "Math" Gain or loss on transaction Step 2: follow the rules to see if gain is recognized No cash (boot) is received = No Gain Cash (boot) is paid = no gain if the boot is less than 25% of total consideration (that means boot / Fv of old asset has to be less than 25%) Cash (boot) is received = Recognize proportional gain if less than 25% Cash (boot) is received and over 25% = gains and losses are accounted for in full
57
if you have a lacking commercial substance exchange, and boot is received but less than 25%. how do you find the proportional gain recognized
Realized gain x (Boot received / FV Received) Realized gain is the FV of old asset - BV of old asset
58
If there is an involuntary conversion, how much of the gain or loss is recognized
ALLLL OF THE GAIN OR LOSS
59
in all nonmonetary transactions at arms length how much is the FV of the goods received? can a loss be recognized?
its the same as the Fv of the shit you gave up, always. and yes a loss is always recognized in full
60
if an exchange lacks commercial substance do you record at FV or BV
BOOK VALUE BITCH
61
So intangible assets right? if you purchase an intangible do you capitalize or expense the cost? what if you delevop it internally, is the cost expensed or capitalized?
If it is purchased, you capitalize the cost if it is internally developed, you expense it
62
Under IFRS for intangible assets, if you have research costs that were internal are capitalized or expensed?
expensed
63
Under IFRS there are 2 ways to value intangible, cost model and the revaluation model can yo explain both
Cost Model is just cost - amortization revaluation model is = Fv on revaluation date - subsequent amortization - subsequent impairment
64
Under IFRS what statement are revaluation losses recorded? what about revaluation gains
revaluation losses are reported on the IS | revaluation gains are reported in OCI
65
If you are a franchisor, how do you treat initial franchise fees and then continuing franchise fees
initial fees are capitalized | Continuing fees are expensed
66
at what point in time are start up costs expensed? What is the tax rule?
when incurred :) 5000 deduction immediately, then remainder hits the BS for 15 years being amortized
67
How is research and devlopment handled under GAAP, capitalized or expensed? Is there an exception for things with alternative uses?
it is expensed! EXCEPT for PPE which could have alternative future use and other R&D costs undertaken on behalf of others (inventory) these are capitalized
68
Under GAAP for computer software, the costs BEFORE technoloical feasibiility are either capitalized? or are they expensed? What about AFTEr tech. feasibility?
they are expensed before, and the coding and testing costs are capitalized if after tech. feasibility
69
are legal fees capitalized or expensed
they are capitalized:)
70
when developing software, is producing masters of the software expensed or capitalized? what about other costs incurred after the release of the product?
capitalize EVERYTHINGGGGG
71
Under IFRS how do you handle internally generated goodwill
it is not an asset, it is expensed in the period incurred
72
for intangible assets with a finite life, how do you perform the two step method inpairment test? if it has a FINITE life what do you do
1: determine the impairment, if the net carrying value > undicsounted future cash flows, there is impairment, so go to... 2: the amount of impairment loss is the difference between FV and the caryying value If its FINITE, only do step 2
73
what is the IFRS method of finding impairment
the amount of impairment loss is the difference between recoverable amount and the caryying value the recoverable amount is the greater of the FV less costs to sell or the PV of future cash flows
74
How do you do impairment for PPE
Step 1: impairment is f the net carrying value > undicsounted future cash flows, there is impairment, so go to... Step: FV or PV net cash flows LESS the net carrying amount

FAR (15 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2025 Bold Learning Solutions. Terms and Conditions