FAR ⑦ Flashcards
which of the following financial instruments issued by a public company should be reported on the issuer’s books as a liability on the date of issuance?
A. common stock that contains an unconditional redemption feature.
B. preferred stock that is convertible to common stock five years from the issue date.
[A]
common stock that contains an unconditional redemption feature should be reported on the issuer’s books as an alibility on the date of issuance because there is an obligation of a cash outflow that the company has no ability to prevent.
trading debt securities with a fair value of 250,000.
-interest income of 25,000 from the securities
-purchased an additional 50,000 of trading debt securities.
-unrealized loss of 20,000 on the trading debt securities
what amount should report for the trading debt securities in its statement of financial position at the end of the current year?
280,000=250,000+50,000-20,000
which of the following information should be disclosed as supplemental information in the statement of cash flows?
-cash flow per share: yes/no
-conversion of debt of equity: yes/no
no-yes
with regard to a fair value hedge, hedge effectiveness is a measure of the extent to which the:
1. cash flows from the hedge transaction offset cash flows from the hedged risk
2. hedge transaction offsets the exposure to changes in the hedged item’s fair value
[2]
a fair value hedge is a hedge of the exposure to changes in the fair value of a recognized asset or liability that are attributable to a particular risk. when a hedge is effective, the change in the value of the derivate offsets the change in the value of a hedged item. for an instrument to qualify for hedge accounting, the hedge must be considered highly effective at offsetting the specified risk during the period the hedge is designated.
a sole proprietorship, entered into a new 18-month office space contract on Sep 15, Y1 , paying the full 36,000 rent contract to the real estate company on that day( lease expiration Mar 15, Y3). assuming that the company reports on a calendar year-end and that journal entries are posted on a quarterly basis, what adjusting journal entry would be made to the prepaid on a quarterly basis(only), what adjusting journal entry would be made to the prepaid rent account prior to closing the Dec 31, y1 financial statements?
dr?cr?
prepaid rent ?
cr prepaid rent 6,000
因爲每季度都會記賬，所以9/30已經將dr-expense，cr-prepaid rent 1,000進行記賬。
所以只需要記賬后三個月的6,000
the five elected members of the Lyons Township town council serve as the board of governance of the LYA.
-blended presentation
-discrete presentation
blended presentation.
the board of the component unit is substantively the same as that of the primary government.
which of the following information about threatened litigation should not be considered to determine whether an accrual is appropriate prior to the issuance of a company’s financial statements?
A. the period in which the threatened litigation became known to management
B. the period in which the underlying cause of the threatened litigation occurred.
[A]
provision for a loss contingency, such as pending litigation, should be charged to income if two things are true:
1. it is probable that a liability has been incurred as of the financial statement date
2. the amount of the loss can be reasonably estimated.
即使未決訴訟直到財務報表日之後才為管理層所知，只要財務報表尚未發布，假設負債存在，就應記錄或有事項以公平反映年末的財務報表
at the end of its first year of operations, G Co. reported a deferred tax asset. will reversal of current temporary differences result in taxable or deductible amounts, and did G have a Y1 profit or loss for tax purposes?
-taxable or deductible amounts
-taxable status of Y1 operations
deductible-profit
the reversal of the current temporary differences will result in future deductible amounts because a deferred tax asset represents future tax savings. these tax savings will be realized in the form of future tax deductions that will reduce the amount of future taxes owed.
a nongovernmental, not-for -profit school began a compain to raise funds for a proposed capital addition.
- cash contributions from parents and alumni 450
- unconditional promises to givem of which 300 was received as of June 30, Y4
- a promise from a Y1 alumnus to give 50 if other Y1 alumni give a total of 50 before Sep 30, Y5 50
- cash contributions from Y1 alumni in response to Mar 1, Y4, alumni challenge 20
what amount of contributions for this campaign should the school report in its June 30, Y4, statement of activities?
[1070]
450+600+20
D sells to wholesalers on terms of 2/15, net 30. D has no cash sales but 50% of D’S customers take advantage of the discount. D uses the gross method of recording sales and trade receivables.
【0-15days】 amount 100,000 collectibles 100%
【16-30 days】 60,000 collectible 95%
【31-60days 】amount 5,000 collectible 90%
【over 60days】 amount 2,500 collectible 500
in its Dec 31 balance sheet, what amount should D report for allowance for discounts?
[1,000]
100,000×1%
in Y1, P city acquired, through forfeiture as a result of nonpayment of property taxes, a parcel of land that the city intends to use as a parking lot for general governmental purposes. the total amount of taxes, liens, and other costs incurred by P incidental to acquiring ownership and perfecting the title was 20,000. the land’s fair market value at the forfeiture date was 60,000. what amount should P city capitalize relative to its governmental activities?
[20,000]
the property retained by the government becomes a general capital asset in the governmental activities column of the government-wide statement of net position and is capitalized at the lower of cost(20,000) or market value(60,000).
the amount capitalized by P city on its government-wide financial statements would be consistent with the treatment afforded to acquired property used in commercial accounting. although the donated property is recorded at its fair value, other acquired property is recorded at the lower of cost or market. the cost of the property represents the city’s outlays incident to acquiring ownership and perfecting title: 20,000
the M Foundation, a not-for-profit organization, is financially interrelated with its beneficiary organization, B university. receipts of the M foundation would be displayed /disclosed in the B university financial statements as:
A. a change in the university’s interest in the foundation on the statement of activities.
B. a note disclosure
[A]
which is a qualitative characteristic that enhances the usefulness of financial information.
A. materiality
B. confirmatory
C. neutrality
D. verifiability
[D]
enhancing qualitative characteristics: comparability,
verifiability, timeliness, and understandability.
neutrality is an attribute of faithful representation, which is a fundamental qualitative characteristic.
which of the cost should a nongovernmental not-for-profit organization report as a supporting service expense?
A. printing cost incurred to create educational flyers on the prevention of illness.
B. cost incurred to advertise the programs of the organization
C. cost of the annual fund-raising dinner
[C]
a program service expense is any expense that relates to the activities for which an organization is chartered, while a supporting service expense is any expense not classified as a program service expense.
A and B is program expense
-transfer to a debt service fund 100
-payment to a pension trust fund 500
-purchase of equipment 300
what amount should B country report for the general fund as other financing uses in its governmental funds statements of revenues, expenditures, and changes in fund balances?
[100]
company X owns 55% of the voting shares of company Y, which is currently undergoing a legal reorganization. in order to account for its investment in company Y, company X will most likely use the:
A. equity method internally and externally
B. acquisition method externally and the equity method internally
C. acquisition method externally and the equity method internally.
D. fair value method internally and externally
[A]
because company Y is undergoing a legal reorganization, it cannot be consolidated with company X. since company X owns 55% of the voting shares of Y, it most likely exercises significant influence and will therefore use the equity method.
integrates its budget into accounting records
#JE
dr: estimated revenue
cr: appropriations control
cr: budgetary control
on Mar 15, Y1, A Co. adopted a plan to accumulate $1,000,000 by Sep 1, Y5. Plans to make four equal annual deposits to a fund that will earn interest at 10% compounded annually. A made the first deposit on Sep 1, Y1. Future value and future amount factors are as follows:
-future value of 1 at 10% for 4 periods 1.46
-future amount of ordinary annuity of 1 at 10% for 4 periods 4.64
-future amount of annuity in advance of 1 at 10% for 4 period. 5.11
A should make four annual deposits of:
[195,695]
題目中$1,000,000是第五年的數字，所以需要通過計算轉會現值。
which of the items is included in the financing activities section of the statement of cash flows?
A. cash effects of transactions obtaining resources from owners and providing them with a return on their investment.
B. cash effects of transactions involving making and collecting loans.
[A]
financing activities including the cash effects of transactions obtaining resources from owners and providing them with a return on their investment.
which of the following should be disclosed in a summary of significant accounting policies?
A. composition of sales by segment
B. basic of profit recognition on long-term construction contracts.
C. future minimum lease payments in the aggregate and for each of the five succeeding fiscal years.
D. depreciation expense.
[B]
the summary of significant accounting policies should disclose policies. the only policy in this question is the basic of profit recognition on long-term construction contracts. the other disclosures are accounting details and would be disclosed in other footnotes, but not in the summary of significant accounting policies.
H sold $100 of inventory for $100 of cash on Dec 31, Y2, which of the following ratios would decrease?
A. working capital turnover
B. net profit margin
[B]
net profit margin=net income / net sales
如果按照原價出售，只有sales增加而net income沒有增加，也就是只有分母增加，所以整體減少
working capital turnover= sales / average working capital
working capital = current asset - current liabilities
分子增加但是分母不變，整體變大。
which defines equity as it relates to a business entity?
A. total assets and liabilities
B. Net revenues.
C. total revenues less total expenses.
D. total assets less total liabilities.
[D]
the basic accounting equation states that assets = liabilities + stockholders’ equity.
this equation can be rearranged such that stockholders’ equity = asset - liabilities.
by definition, equity is the residual interest in the asset of a company that remains after deducting its liability.
J city issued $1,000,000 general obligation bonds at 101 to build a new city hall. as part of the bond issue, the city also paid a $500 underwriter fee and $2,000 in debt issue costs. what amount should J city report as other financing sources?
[1,010,000]
underwriter’s fees and other issues costs of $2,000 would be accounted for as debt service expenditures.
a note payable was issued in payments for services received. the services has a fair value less than the face amount of the note payable.
A. at the face amount with a separate deferred credit for the discount calculated at the imputed interest rate.
B. at the face amount minus a discount calculated at the imputed interest rate.
[B]
the correct presentation of a note payable is to show the face amount, less a discount on the liability itself at the imputed interest rate.
an automobile dealer sells service contracts. the contracts stipulate that the dealer will perform specific repairs on converted vehicles. the contracts vary in length from 12 to 36 months. do the following increase when service contracts are sold?
deferred revenue: yes/no
service revenue: yes/no
yes/no
when service contracts are sold, deferred revenue increases, but service revenue does not increase until services are performed.
the lessee should recognize amounts probable of being owed under a residual value guarantee as a component of lease payments:
A. on the commencement date of the lease
B. on a straight line during the lease
[A]
the lessee calculates the lease payment at the commencement of the lease based on the present value of the following items: fixed payments, the exercise price of the purchase option, termination penalities, and the probable amount owed of the guaranteed residual.
which of the following statements describes a characteristic of the capital projects fund?
A. the life of the capital projects fund is short and its limited to a construction period of one to three years.
B. capital project fund expenditures are usually entirely classified as capital outlays and are subject to depreciation recognition.
[A]
B is wrong. capital project funds use modifies accrual accounting and do not record depreciation.
on Dec 31, special insurance costs, incurred but unpaid, were not recorded. if these insurance costs were related to work-in-process. what is the effect of the omission on accrual liabilities and retained earnings in the Dec 31, balance sheet?
accrued liabilities: understated/no effect
retained earnings: understated/no effect
understated-no effect
因為受影響的是inventory，不是cost of sales所以不會影響retain earning
LIFO method is used, the index number should be calculated by?
index=
ending inventory at current yeat cost /
ending inventory at base year cost
to be significant enough to report on, a segment must be at lease 10% of :
A. segment revenue is 10% or more of combined revenue of all the company segments.
B. segment operating profit or loss is 10% or more of combined operating profit or loss of all company segments.
[A]
1. combined revenue(不論公司内部或外部（
2. operating profit( ALL segment NOT having operating loss)
3. identifiable assets
which should be considered part of one of the three primary user groups of the external financial reports of a state government?
A. preparers of state government financial reports.
B. citizens of a neighboring state
C. internal managers in the executive branch of the state government
D. advocate groups within the state
[D]
A. 州政府財務報告的編制者。
B. 鄰國公民
C. 州政府行政部門的內部管理人員
D. 州內的倡導團體
3 PRIMARY user groups
citizens
legislative/oversight groups
investors/creditors
which of the following is required financial statement for an investment trust fund?
A. statement of activities
B. statement of changes in fiduciary net position
C. statement of revenues, expenses, and changes in fiduciary net position
[B]
N Co. disclosed in the notes to its financial statements that a significant number of its unsecured trade account receivables are with companies that operate in the same industry. this disclosure is required to inform financial statement users of the existence of:
A. concentration of credit risk
B. concentration of market risk
[A]
credit risk is the risk that a counterparty will partially or completely fail to perform per the terms of the contract. a concentration exists if a number of counterparties are engaged in similar activities; have similar economic characteristics such that the ability of all of them to meet obligations is similarly affected.
market risk is the possibility of loss from changes in market value due to changes in economic circumstances.
the town of T is preparing the workpaper entries to adjust its governmental fund financial statement balances for use in government-wide financial statements. what entry is most likely correct to give appropriate recognition to property tax revenues that are measurable but not available?
A. dr: unearned revenue
cr: tax revenue
B. dr: deferred inflows
cr: tax revenue
deferred inflows
cr: tax revenue
what amount of cash received under the direct method used in the operating cash flow calculation?
-net sales 320
-issuance of preferred stock 5
-decrease in accounts payable 11
-increase in accounts receivable 60
-increase in unearned revenue 7
-increase in inventories 19
-sale of trading securities 2
269=320-60+7+2
decrease in accounts payable 是支出金額，不應算在cash receive裡面
