FAR

Question 1

Equity method

Answer 1

the equity method is used if a company has 20-50 of stock in an investee. Used when an investor has significant influence over an investee but does not have control.

Question 2

Temporary vs permanent tax differences.

Answer 2

Temporary differences occur whenever there is a difference between the tax base and the carrying amount of assets and liabilities on the balance sheet. Permanent differences are differences between the tax and financial reporting of revenue or expense items that will not be reversed in future.

Question 3

Temporary tax differences create a tax asset or liability based on the tax%

Question 4

Balloon loan

Answer 4

A short term loan that does not fully amortize over its term.

Question 5

Retained earnings entries most common

Answer 5

The most common credits and debits made to Retained Earnings are for income (or losses) and dividends.

Question 6

10-K

Answer 6

Large Accelerated Filers 60 days
Accelerated filers 75 days
other registrants 90 days

Question 7

10-Q

Answer 7

Large accelerated filers 40 days
Accelerated filers 40 days
other registrants 45 days

Question 8

Statement of cash flows

Answer 8

Indirect method begins with NI
Financing activities:
-proceeds from long term debt
issuance and payments.
-issuance of equity,
-sale of equity securities,
-dividends paid out
investing activities:
-Available for sale securities (if cash equivalent it is not included)
operating activities: any cash in or out. Dividends received are recorded here

Question 9

Subsidiaries consolidation

Answer 9

CAR IN BIG
Eliminate equity

Common stock
Add paid-in capital
Retained earnings

investments in subsidiaries
non-controlling shares included at cost

Balance sheet and fair value adjustments
intangibles and goodwill

Question 10

Different types of bonds

Answer 10

Serial
Corporate
Municipal
Perpetual
Convertible
Government
Callable
Debentures
Agency securities

Question 11

Serial bonds

Answer 11

Multiple maturity dates

Question 12

Under perpetual inventory systems FIFO and LIFO would result in what

Answer 12

FIFO under periodic and perpetual inventory systems will be the same valuation
LIFO under periodic and perpetual inventory systems will not

Question 13

Perpetual vs periodic inventories

Answer 13

Perpetual inventory constantly being updated.
Periodic only records updates to the inventory systems and cost of sales at scheduled times throughout the year.

Question 14

Assets=liabilities + equity
Debit balance credit balances

Answer 14

DEALOR:

Balance of accounts:

Debit increase balance accounts-
Draws/dividends
Expense
Assets

Credit increase balance accounts-
Liabilities
Equity
Revenue