Far 2

Question 1

What is the equation for Ending ARO?

Answer 1

Beginning ARO + PV of new ARO + Accretion expense - ARO settled during the period

Question 2

When is the estimated revenue account balance pf a governmental type fund eliminated?

Answer 2

When the budgetary accounts are closed

Question 3

What document is typically issued as part of the due-process activities of FASB?

Answer 3

A proposed accounting standards update

Question 4

What does a NFP statement show in there statement of activities?

Answer 4

Change in net assets without donor restrictions and net assets with donor restrictions

Question 5

A majority voting interest is deemed to be:

Answer 5

Greater than 50% of the directly or indirectly owned outstanding voting shares of another entity have been acquired

Question 6

What is the definition of a restricted fund?

Answer 6

Restricted as to use by the donor, grantor, or other source of the resource

Question 7

How are discontinued operations that occur at midyear initially reported?

Answer 7

Included in net income and disclosed to interim financial statements

Question 8

What is the equation for total consideration given in an acquisition?

Answer 8

Cash + Common stock + Fair value of contingencies = total consideration

Question 9

What is the formula for Total fund balance and unassigned fund balance?

Answer 9

Total asset - total Liabilities = Total Fund Balance

Total Fund balance - assigned fund balance (purchase order) = Unassigned fund balance

Question 10

What are some examples of investing section in $ flows?

Answer 10

Purchase of AFS securities and Equipment

Question 11

How are checks treated at the balance sheet date if not disbursed?

Answer 11

Still included as cash on the balance sheet date net any overdraft fees

Question 12

What is the depreciable life of an asset for a finance lease with option to purchase at the end of life of lease?

Answer 12

Total years of the lease

Question 13

When a company pledges (assigns) receivables in return for a loan, how will the assigning company (giver of receivables) account for the A/R given up?

Answer 13

The giver of the receivables will still have control of the receivables

Question 14

Which of the following accounts of a governmental unit is credited when taxpayers are billed for property taxes?

Answer 14

Dr Property taxes receivable
Cr Revenues (net of estimated uncollectibles)

Question 15

When an entity reissues F/S should the entity recognize subsequent events?

Answer 15

no, no adjustments for subsequent events is made between the date the original F/S were issued or available to be issued and the date the F/S are reissued

Question 16

What can be capitalized for a Patent?

When would a patent be expensed?

Answer 16

Purchase Price + Acquisition cost + Successful legal fees

Expensed when there is an unsuccessful defense in its entirety - any amortization up until that point if held for a few years

Question 17

How are multiyear pledges recorded?

Answer 17

At their net present value as net assets with donor restrictions

Question 18

What is included in discontinued operations?

Answer 18

Operating loss + Termination benefits + cost to terminate the lease

Question 19

What is the J/E for a partially liquidating cash dividend?

Answer 19

Dr Retained earnings
Dr APIC
Cr Cash dividend payable

Question 20

What is the primary purpose of a quasi-reorganization?

Answer 20

Eliminate Retained earnings: an accumulated deficit (Negative Retained earnings balance)

Why? So Corporation can have a “fresh start” with a 0 balance in R/E

Question 21

How are start-up costs treated?

Answer 21

Expensed as incurred

Question 22

How should donated assets be recorded?

Answer 22

At Fair value

Question 23

What is the criteria for a NFP to recognize Salary & Wage Expense?

Answer 23

1. Services are normal part of the program or supporting services would be performed by salaried personnel
2. Organization exercises control over the employment and duties of the donors of the services
3. ONPOhas a clear measurable basis for amount
4. Services are significant
5. Service are not primarily for benefit of its members

Special events do not meet criteria to be recognized as expense

Question 24

When using direct method do you net A/R against AFDA?

Answer 24

NO

Question 25

What is the equation for compensation expense for an enterprise fund?

Answer 25

End Accrued compensated balance + $ paid for compensated balances - Beg balance for accrued compensated balances

Question 26

How do you calculate the net balance of an intangible asset-franchise account net of amortization?

Answer 26

Purchase price/Useful life = Amort expense

Purchase price - Amort expense

Question 27

When wages payable increase from the beginning to the end of the year, what is the equation in the Co’s statement of cash flow (direct method)

Answer 27

Salary expense Less the increase in wages payable from the beginning to the end of the year

Question 28

When the first annual lease payment is paid at the inception of a finance lease, what is the effect on interest expense and lease liability?

Answer 28

Lease liability decreases and interest expense is not affected since no time has passed to accrue interest expense