FAR 2C Flashcards
Two fundamental qualitative characteristics of financial information (IASB Framework 5-18)
- Relevance 2. Faithful Representation
Remember that the IASB has no…
enforcement authority
The following are held by Smite Co.: $20,000 Cash in checking account $30,000 Cash in bond sinking fund account $250 Post-dated check from customer dated one month from balance sheet date $200 Petty cash $7,000 Commercial paper (matures in two months) $5,000 Certificate of deposit (matures in six months) What amount should be reported as cash and cash equivalents on Smite’s balance sheet?
$27,200. The cash balance is $20,200: the sum of the checking account balance and the petty cash. Because it has a maturity of less than three months, the only cash equivalent is the $7,000 of commercial paper. The final sum of these two accounts is $27,200.
When goods are shipped FOB shipping point
Title transfers to Buyer at the shipping point, meaning Buyer bears the shipping charges
The aging method to determine uncollectible accounts expense…
-First determines the required ending balance in the allowance account based on the age of receivables -Then adjusts the allowance account to that balance.
The credit sales method to determine uncollectible accounts expense…
Does not adjust the allowance balance to a required ending amount, but rather simply places the appropriate percent of sales into uncollectible accounts expense and the allowance account.
Under IFRS, a cash generating unit (CGU) is:
The smallest group of assets that generates independent cash flows from continuing use.
When a note receivable is determined to be impaired…
A loss or expense is recognized as equal to the difference between the note carrying value and the present value of the cash flows expected to be received
FBO destination means…
Seller incurs the cost and title does not transfer until goods reach the destination.
What is the appropriate treatment for goods held on consignment?
The goods should be included in the ending inventory of the consignor.
A disadvantage of the periodic inventory system is that …
The cost of goods sold amount used for financial reporting purposes includes both the cost of inventory sold and inventory shortages.
FIFO produces the same results for ______ and ______ systems.
periodic and perpetual
Generally, which inventory costing method approximates most closely the current cost for Cost of goods sold and Ending inventory.
Cost of goods sold: LIFO Ending inventory: FIFO
