FAR Deck 1 Flashcards
What is THE most authoritative source when it comes to GAAP?
FASB ACCOUNTING STANDARDS CODIFICATION
Does cash basis accounting recognize revenue when earned?
NO, ONLY WHEN CASH IS RECEIVED
Does a company that files Financial Statements with the SEC need to disclose the date through which subsequent events have been evaluated?
NO DISCLOSURE IS NECESSARY
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 - ____________
BEGINNING RECEIVABLE
Apparently, sports teams can only recognize revenue from _______ games.
HOME
Capitalized Interest (when it comes to PP&E) equals the smaller of the total interest incurred or the __________ interest.
AVOIDABLE (Interest on the weighted average of accumulated expenditures)
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
BEGINNING RETAINED EARNINGS
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.
SALE
When trying to determine the most advantageous market, you are trying to determine the ______ _______ of the stocks.
FAIR VALUE
Bonds that a company intends to hold to maturity are valued at _________ ______
AMORTIZED COST
When it comes to percentage-of-completion, a liability only exists when progress billings exceed COSTS and _______ _______
ESTIMATED EARNINGS
Don’t forget, Inventory Turnover = ________ / Average Inventory (hint, NOT sales)
COGS
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.
FULL
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.
RETAINED EARNINGS
Deposits received from customers are considered WHAT in the financial statements?
LIABILITIES (most likely these are deposits for services or products to be rendered, hence they are a LIABILITY)
If a company’s first note describes significant changes in accounting policies, do the subsequent notes need to duplicate those descriptions?
NO, but they might present the calculations and amounts that reflect those new policies
Can a firm capitalize interest on its ordinary inventory production?
NO
Can a firm capitalize interest on special order goods held for sale to a customer?
YES
What is this equation used for?
End of Year Inventory Cost / Base Year Inventory Cost = Annual Cost Index
DOLLAR VALUE LIFO
Annual Cost Index * Annual Increments = ?
DOLLAR VALUE LIFO COST FOR YEAR
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.
RESIDUAL
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
PRESENT VALUE
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?)
UNDISCOUNTED
If the inventory is sold AT COST (ex. Inventory costing $100 sold for $100), then Net Profit Margin would increase or decrease?
DECREASE (Net Income (no change) / Net Sales (Bigger))
