F4

Question 1

What is the formula for Working Capital?

Answer 1

CA-CL

Question 2

What is the formula for the current ratio?

Answer 2

CA/CL

Question 3

What is the formula for the quick ratio?

Answer 3

Cash + A/R + MS (CA – Inv) / CL

Question 4

What are current assets?

Answer 4

less than the longer of one operating cycle or 1 year

Question 5

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

Answer 5

include in LT liabilities if intent and ability

Question 6

How is ST liabilities reclassified under IFRS?

Answer 6

not allowed until refinance occurs

Question 7

What are cash and cash equivalents?

Answer 7

highly liquid assets with original maturity of <= 90 day

Question 8

How is the adjusted bank balance calculated?

Answer 8

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

Question 9

How is the adjusted book balance calculated?

Answer 9

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

Question 10

What is the T account for A/R?

Answer 10

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

Question 11

What is A/R NRV?

Answer 11

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

Question 12

What is the Gross Method for discounts?

Answer 12

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

Question 13

What is the Net Method for discounts?

Answer 13

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

Question 14

How are trade discounts applied?

Answer 14

net and sequentially

Question 15

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

Answer 15

wait until actual

Question 16

For sales returns and allowances, what is the exception?

Answer 16

if material %, estimate and accrue

Question 17

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

Answer 17

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

Question 18

What is the % of sales allowance method?

Answer 18

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

Question 19

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

Answer 19

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

Question 20

What is the Aging A/R allowance method?

Answer 20

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

Question 21

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

Answer 21

footnote disclosure

Question 22

What is factoring without recourse?

Answer 22

true sale, factor assumes risk of loss

Question 23

What is factoring with recourse?

Answer 23

sale or loan, factor can sell any back to seller

Question 24

What are the conditions of a sale?

Answer 24

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.

Question 25

Compare A/R to N/R?

Answer 25

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

Question 26

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

Answer 26

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

Question 27

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

Answer 27

no sale yet if returns cannot be reasonably estimated

Question 28

What is the exception for sales with right to return?

Answer 28

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

Question 29

What are the conditions of a sale?

Answer 29

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

Question 30

What is the general rule for valuing inventory?

Answer 30

value at cost if sold at profit

Question 31

What is the exception for valuing inventory?

Answer 31

value at LCM if sold at loss

Question 32

How are precious metals and farm products valued?

Answer 32

at NRV= SP-disposal costs

Question 33

What is “market” in LCM?

Answer 33

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

Question 34

How do you record LCM?

Answer 34

write down in COGS, if material then I/S

Question 35

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

Answer 35

reversal allowed up to amount of write-down

Question 36

Compare periodic vs. perpetual inventory.

Answer 36

Periodic (uses purchases), Perpetual (uses inventory)

Question 37

Compare the cost of the land vs. building.

Answer 37

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