FAR 1

Question 1

What do lease payments include at the beginning of a lease?

Answer 1

Fixed Lease Payments and in substance fixed payments

Variable lease payments dependent on a rate or index

Payments associated with renewal or termination options or the exercise of a purchase option

Fees Paid by the Lessee to Owners of Special-Purpose Entities

Residual Value Guarantee

Question 2

What do lease payments exclude?

Answer 2

Variable Lease payments not dependent on an index or rate

Guarantee of lessors debt

Question 3

What is a small stock dividend?

What is a large stock dividend?

Answer 3

20-25% - Reduce Retained earnings by the Fair value amount of shares issued

More than 20-25% - Reduce R/E by the par value of shares issued

Question 4

What are the 3 components of Net Position for Gov’t Business (fund) type activities?

Answer 4

Net investment in Capital Assets

Restricted

Unrestricted

Question 5

What is the affect on failure to accrue an expense and a payable on working capital and cash flow?

Answer 5

No effect on Cash flow

Overstates Working capital since Liability was not recorded - Understates a Liability

Question 6

What are the 3 components of Net Position for Gov’t Fund type activities?

Answer 6

Committed and assigned

Question 7

When a non-monetary transaction occurs that lacks commercial substance, what amount is recorded for the new asset?

Answer 7

Book value amount of the CV of the asset given up in exchange for new asset

Question 8

For the general fund, what is classified as other financing sources?

Answer 8

Proceeds of debt issue

Interfund transfers of debt service

Question 9

How to reconcile cash balance per books for a second month.

Answer 9

Balance Per Bank stmt = End bank balance Prior month
+Deposits in current month
-Disbursements in current month
-Outstanding checks in current month
= Cash Balance per books at end of current month

Question 10

What is the following characteristic of a perfect hedge?

Answer 10

No possibility of future gain or loss

Question 11

For a sales type lease, is gain recognized?

Answer 11

Yes, full amount of gain is recognized.

Fair Value of the Equipment or (sum of lease receivable and any prepaid lease payments by lessee, if lower) - CV of equipment = Gain

Interest revenue is recognized over the life of lease

Question 12

What are examples of disclosure requirements for significant accounting policies?

Integral part of the Financial statements

Answer 12

How investments are treated as cash equivalents

basis of accounting for loans & Trade receivables

Method of recognizing interest income on loan and trade receivables

Depreciation methods

How profit on long-term contracts are recognized

basis of consolidation

Question 13

If an employer-employee relationship exists with volunteers, how would a NFP record services rendered by volunteers?

Answer 13

Services would be recorded at Fair Value as both an expense and a contribution

Question 14

How is restricted cash treated?

Answer 14

as a current or non-current asset

Question 15

Where is a Foreign transaction gain shown?

Where is a Foreign translation gain shown?

Answer 15

Foreign transaction is shown in Income Statement

Foreign Translation is shown in OCI

Question 16

How should a municipal solid waste landfill be recorded in a Gov’t Type general fund?

Answer 16

Dr Expenditure
Cr Fund liabilities

No affect on L/t liabilities and L/T assets since Modified accrual is used

Question 17

What is the contribution called for by a plan for the period in which the individual renders services?

Answer 17

Net Pension costs

Question 18

What is the total consideration equation when non-monetary transaction has commercial substance?

Answer 18

FV of asset given up + Cash given up

or

FV of asset given up - Cash received

Gain or Loss recognized in Full

Question 19

What are supporting activities expense for a NFP?

Answer 19

Fundraising costs, administrative costs & membership development expenses, management & general activities

Question 20

What are program expenses for a NFP?

Answer 20

Expenses that relate directly to organizations mission. Such as expenses that directly correlate with nurses that work with a NFP hospital to carry out their services.

Question 21

Where would a bond issued at 98 be classified in the operating $ Flows?

Answer 21

Financing inflow of cash

Question 22

How should underlying securities owned with regard to reverse repurchase and fixed coupon reverse repurchase agreements be disclosed as?

Answer 22

Reported as investments

Question 23

What are the financial categories of a NFP’s financial position?

Answer 23

Assets, Liabilities, Net Assets

Net Assets are made up of Net Assets with donor restrictions and Net assets without donor restrictions

Question 24

For troubled Debt restructuring what is the complete equation to solve for ordinary gain in income from continuing operations?

Answer 24

FV of land transferred
= Gain on restructure

FV of Land transferred - Carrying amount of land = Gain on disposition

Ordinary Gain = Gain on restructure + Gain on disposition

Question 25

Equation to show proper amount of cash on Balance sheet date?

Answer 25

Do not include checks dated after Balance sheet date

Check book balance + check still in bank account that is payable to vendor at B.S. date - NSF check returned on or before B.S. date

Question 26

If a premium on a bond payable is NOT amortized, what are the effects on interest expense & total Stock holders equity?

Answer 26

Interest expense: Overstated (interest expense get smaller over time)

Total Stock holders equity: Understated (Since interest expense gets smaller over time, the Net income would be overstated since original interest expense is higher)

Question 27

What are the requirements of applying the acqusition method?

Answer 27

Identifying the acquirer

Determining acquisition date

recognizing & measuring identifiable assets acquired & liabilities assumed and any NCI

recognizing and measuring goodwill or a gain from a bargain purchase

Question 28

When solving for non-current debt for Governmental activities, what is the equation? Pay attention to question and what it is asking.

Answer 28

Beginning Balance of General purpose Debt
Less: Principal PMTS on general purpose debt
Plus: Finance Lease
Less: Amount due at signing of finance lease
= Ending general purpose debt

Question 29

How should actual and estimated expenditures benefiting all interim periods be expense throughout the year?

Answer 29

Expensed ratably throughout the year

Question 30

When checks are considered outstanding, does it affect the book or bank balance?

What is the equation for the G/L cash balance to get it to the proper cash account balance?

Answer 30

Bank Balance - do not have to use it in formula. When check is written book balance is reduced.

Beg G/L - bank service charge - NSF Check +/- Book Error = End Cash account balance