FAR 1 - Financial Reporting

Question 1

What is Comprehensive Income

Answer 1

the change in equity of a business during a period from transactions and other events and circumstances from non-owner sources. It includes all changes in equity except those resulting from investments by owners and distributions to owners.

Question 2

When a fixed asset is sold where is the gain or loss recognized

Answer 2

Part of income from continuing operations

Question 3

What type of expenses are Freight Out and Freight In

Answer 3

Freight Out is a selling expense and Freigh In is a cost of goods sold expense

Question 4

In computing the weighted-average number of shares outstanding for earnings per share (EPS) determination what type of transaction must be retroactively recognized and treated as if it had occurred at the beginning of the year

Answer 4

Stock dividend or stock split to the same class of shareholders

Question 5

For the 10Q report, both large accelerated and accelerated filers have how many days to issue the report

Answer 5

40 days

Question 6

What is in the numerator in the EPS calculation

Answer 6

Net income less preferred dividends paid

Question 7

For the 10K report, both large accelerated and accelerated filers have how many days to issue the report

Answer 7

Large accelerated: 60 days
Accelerated: 75 days

Question 8

True or false, stock options enter into the calculation of basic EPS

Answer 8

false

Question 9

true or false: Under the cost method, Net income will be affected when acquired shares are re-sold at a higher or lower price.

Answer 9

False

Question 10

Under the use of the cost method for treasury stock transactions when shares are repurchased and reissued at a higher price, what account increases

Answer 10

APIC

Question 11

What is a primary difference between the cost method and legal method when accounting for treasury stock transactions

Answer 11

the timing of the recognition of gains or losses on treasury stock transactions.

Question 12

Under the cost method what are treasury stock shares recorded and carried at

Answer 12

their reacquisition cost

Question 13

At the time the rights are exercised, the portion of proceeds in excess of stocks’ par value is credited to what account

Answer 13

APIC

Question 14

What is a large stock dividend by GAAP standards

Answer 14

stock dividend is more than 20% to 25% of the previously outstanding shares.

Question 15

What type of situation would cause earnings to differ from comprehensive income?

Answer 15

Unrealized holding loss from available-for-sale debt securities.

Question 16

A “liquidating dividend” is a return of capital which does what

Answer 16

decreases additional paid-in capital

Question 17

Treasury stock transactions are not part of comprehensive income

Answer 17

True

Question 18

What does the the repurchase of common stock do to the FS

Answer 18

Reduces Stockholders’ equity as well as the total capital available to a firm, resulting in a higher debt-to-total capital ratio as debt remains unchanged

Question 19

Provide examples of what Comprehensive income includes

Answer 19

Changes in the funded status of a pension plan, unrealized gains and losses on available-for-sale debt securities and derivative instruments designated as cash flow hedges, foreign currency items, and instrument-specific credit risk.