FAR Deck 1

Question 1

What is THE most authoritative source when it comes to GAAP?

Answer 1

FASB ACCOUNTING STANDARDS CODIFICATION

Question 2

Does cash basis accounting recognize revenue when earned?

Answer 2

NO, ONLY WHEN CASH IS RECEIVED

Question 3

Does a company that files Financial Statements with the SEC need to disclose the date through which subsequent events have been evaluated?

Answer 3

NO DISCLOSURE IS NECESSARY

Question 4

When converting from cash to accrual basis to calculate accrual revenue, an easy equation to use to would be:
Ending Receivable + Write-offs + Cash Revenue - ____________

Answer 4

BEGINNING RECEIVABLE

Question 5

Apparently, sports teams can only recognize revenue from _______ games.

Answer 5

HOME

Question 6

Capitalized Interest (when it comes to PP&E) equals the smaller of the total interest incurred or the __________ interest.

Answer 6

AVOIDABLE (Interest on the weighted average of accumulated expenditures)

Question 7

If there is a change in the inventory costing method, it is reported as a cumulative effect of the change as an adjustment to ___________ _________ ___________, net of tax

Answer 7

BEGINNING RETAINED EARNINGS

Question 8

When reporting on discontinued operations after discontinuing a specific operation, you add up the total operating loss and the loss from ________ the operation. This is the amount that will be taxed.

Answer 8

SALE

Question 9

When trying to determine the most advantageous market, you are trying to determine the ______ _______ of the stocks.

Answer 9

FAIR VALUE

Question 10

Bonds that a company intends to hold to maturity are valued at _________ ______

Answer 10

AMORTIZED COST

Question 11

When it comes to percentage-of-completion, a liability only exists when progress billings exceed COSTS and _______ _______

Answer 11

ESTIMATED EARNINGS

Question 12

Don’t forget, Inventory Turnover = ________ / Average Inventory (hint, NOT sales)

Answer 12

COGS

Question 13

When it comes to goodwill from purchasing a subsidiary, don’t forget, that goodwill is NOT based on the % interest in the subsidiary. If it is a subsidiary, that means it is owned more than 50%, and goodwill is recognized at the ______ amount.

Answer 13

FULL

Question 14

You can calculate the earnings from a subsidiary by looking at the beginning and ending _______ ________ and the dividends issued to “squeeze out” the subsidiary total earnings.

Answer 14

RETAINED EARNINGS

Question 15

Deposits received from customers are considered WHAT in the financial statements?

Answer 15

LIABILITIES (most likely these are deposits for services or products to be rendered, hence they are a LIABILITY)

Question 16

If a company’s first note describes significant changes in accounting policies, do the subsequent notes need to duplicate those descriptions?

Answer 16

NO, but they might present the calculations and amounts that reflect those new policies

Question 17

Can a firm capitalize interest on its ordinary inventory production?

Answer 17

NO

Question 18

Can a firm capitalize interest on special order goods held for sale to a customer?

Answer 18

YES

Question 19

What is this equation used for?
End of Year Inventory Cost / Base Year Inventory Cost = Annual Cost Index

Answer 19

DOLLAR VALUE LIFO

Question 20

Annual Cost Index * Annual Increments = ?

Answer 20

DOLLAR VALUE LIFO COST FOR YEAR

Question 21

For Finance Leases, don’t forget that you have to multiply the ________ value by the Present Value of $1 at the implicit interest rate and add it to the PV of the beginning lease liability.

Answer 21

RESIDUAL

Question 22

For the Lessor in a Finance Lease (sales-type lease) don’t forget that they recognize profit based on the excess of _____ _______ of the selling price over its cost

Answer 22

PRESENT VALUE

Question 23

To determine if a long-lived asset is impaired, you first compare the _________ expected future cash flows of the asset to the carrying value of the asset. If the _______ expected future cash flows are GREATER than the carrying value, then no impairment needs to be calculated. (Hint: is is PV or Undiscounted?)

Answer 23

UNDISCOUNTED

Question 24

If the inventory is sold AT COST (ex. Inventory costing $100 sold for $100), then Net Profit Margin would increase or decrease?

Answer 24

DECREASE (Net Income (no change) / Net Sales (Bigger))

Question 25

When can a company that has inventory that was sold on consignment recognize revenue?

Answer 25

AFTER THE PERIOD OF CONSIGNMENT

Question 26

Does double declining balance method of depreciation take into account salvage value?

Answer 26

NO (don’t forget!)

Question 27

To report segment financial information, the segment must account for 10% or more of combined _______, OR combined operating PROFIT, OR identifiable assets.

Answer 27

REVENUE

Question 28

How do you find the discount to be amortized for a note payable or bond? Face Value - ________

Answer 28

(PURCHASE PRICE - ACCRUED INTEREST RECEIVABLE)

Question 29

When a stock dividend is declared, what account is debited for the fair value of the stock dividend on the date of the declaration?

Answer 29

RETAINED EARNINGS

Question 30

When you are retiring a bond, this is considered a _________ (Hint: Re-something)

Answer 30

REACQUISITION