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CPA- FAR > F4 > Flashcards

F4 Flashcards

1
Q

What is the formula for Working Capital?

A

CA-CL

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2
Q

What is the formula for the current ratio?

A

CA/CL

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3
Q

What is the formula for the quick ratio?

A

Cash + A/R + MS (CA – Inv) / CL

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4
Q

What are current assets?

A

less than the longer of one operating cycle or 1 year

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5
Q

What are the criteria under GAAP for reclassification of ST liabilities expected to be refinanced?

A

include in LT liabilities if intent and ability

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6
Q

How is ST liabilities reclassified under IFRS?

A

not allowed until refinance occurs

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7
Q

What are cash and cash equivalents?

A

highly liquid assets with original maturity of <= 90 day

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8
Q

How is the adjusted bank balance calculated?

A

bank balance + deposits in transit – outstanding checks +/- errors

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9
Q

How is the adjusted book balance calculated?

A

book balance – service charges + bank collections – NSF + interest income +/- errors

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10
Q

What is the T account for A/R?

A

Beg Balance + Credit Sales – W/o – Convert to note – collections = End Balance

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11
Q

What is A/R NRV?

A

A/R – uncollectibles, discounts, and sales returns & allowances

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12
Q

What is the Gross Method for discounts?

A

assume discount not taken. If is taken, use Sales Discount taken account (Contra-revenue)

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13
Q

What is the Net Method for discounts?

A

assume discount is taken. If is not taken, use Sales Discount not taken account (Revenue)

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14
Q

How are trade discounts applied?

A

net and sequentially

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15
Q

For sales returns and allowances, what is the general rule?

A

wait until actual

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16
Q

For sales returns and allowances, what is the exception?

A

if material %, estimate and accrue

17
Q

What is the T account for Allowance for Uncollectible A/R?

A

Beg Balance + recovery + C/Y BDE – W/o = End Balance

18
Q

What is the % of sales allowance method?

A

C/Y BDE = % of sales, plug ending balance

19
Q

What is the % of end A/R allowance method?

A

End Allowance = % of end A/R, plug C/Y BDE

20
Q

What is the Aging A/R allowance method?

A

End Allowance = aging A/R, plug C/Y BDE

21
Q

How do you record pledging (assignment) of A/R?

A

footnote disclosure

22
Q

What is factoring without recourse?

A

true sale, factor assumes risk of loss

23
Q

What is factoring with recourse?

A

sale or loan, factor can sell any back to seller

24
Q

What are the conditions of a sale?

A

Seller’s obligation for uncollectible accounts can be estimated. Seller surrenders control to buyer. AND Transfer is not required to repurchase A/R, but may replace.

25
Q

Compare A/R to N/R?

A

N/R is written, valued at PVFCF. A/R is oral, valued at NRV

26
Q

What are the steps in discounting N/R (selling to a bank)?

A

FV * Interest % = Maturity Value * bank % * time remaining = bank income

27
Q

What is the general rule for sales with right to return?

A

no sale yet if returns cannot be reasonably estimated

28
Q

What is the exception for sales with right to return?

A

if returns can be reasonably estimated, record as sale w allowance (if conditions of a sale exist)

29
Q

What are the conditions of a sale?

A

SP is fixed, Buyer assumes risk of loss, buyer paid consideration, product is substantially complete, returns can be estimated

30
Q

What is the general rule for valuing inventory?

A

value at cost if sold at profit

31
Q

What is the exception for valuing inventory?

A

value at LCM if sold at loss

32
Q

How are precious metals and farm products valued?

A

at NRV= SP-disposal costs

33
Q

What is “market” in LCM?

A

middle value of ceiling (NRV), replacement cost, and floor (NRV – PM)

34
Q

How do you record LCM?

A

write down in COGS, if material then I/S

35
Q

IFRS uses LC(NRV), what is the difference from LCM?

A

reversal allowed up to amount of write-down

36
Q

Compare periodic vs. perpetual inventory.

A

Periodic (uses purchases), Perpetual (uses inventory)

37
Q

Compare the cost of the land vs. building.

A

cost of land is up to digging hole. Building costs are after

CPA- FAR (9 decks)

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