FAR 1.03-Elements of Financial Statements

Question 1

Define Comprehensive Income

Answer 1

All changes in equity other than owner sources.

Question 2

What are the 5 types of costing?

Answer 2

1. Historical cost
2. Replacement cost
3. Fair Market Value
4. Net realizable value
5. Present value

Question 2

What is Fair Market Value (FMV)?

Answer 2

The price that would be paid or received to purchase an asset or transfer a liability in an orderly transaction between people at the market date.

Question 3

What is replacement cost?

Answer 3

What it would cost to replace an item (inventory)

Question 4

What are the 10 key elements of Financial statements?

Answer 4

1. Assets
2. Liabilities
3. Equities
   
   1. Contributions/Investments by owners
   2. Distributions to owners (dividends)
   3. Comprehensive Income
      
      1. Revenues
      2. Expenses
      3. Gains
      4. Losses

Question 6

What is Net Realizable Value?

Answer 6

The amount expected to be converted into (A/R)

Question 7

What is Historical cost?

Answer 7

Amount actually paid for an asset.

Question 8

What are the 4 elements of Comprehensive Income?

Define each element.

Answer 8

1. Revenues-inflows from primary operations
2. Expenses-outflows from primary operations
3. Gains-increases in edquity from incidental transactions
4. Losses-decreases in equity from incidental operations

Question 9

What does a full set of financial statements?

Answer 9

1. Balance Sheet (Statement of Position)
2. Income Statement (Statement of Earnings Financial and Comprehensive Income)
3. Statement of Cash Flows
4. Statement of Changes in Owner’s Equity (Statement of Investments by and Distributions to Owners)

Question 10

What is Present Value?

Answer 10

Discounted cash flows due to the time value of money (N/R, B/P, Leases)