FAR - Deck 1 Flashcards
Where is Accumulated Other Comprehensive Income Reported?
FASB ASC 220-10-45 requires that accumulated other comprehensive income be reported in the stockholders’ equity section of the balance sheet
What are the Statements of earnings and comprehensive income?
The extent to which and the ways in which the equity of the entity increased or decreased from all sources other than transactions with owners during the period. They provide information about the causes of changes in assets and liabilities, including the results of ongoing major or central operations, the results of incidental or peripheral transactions, and the effects of other events and circumstances stemming from the environment.
The asset/liability method of accounting for income taxes requires that deferred income taxes be?
The asset/liability method bases the accounting for deferred income taxes on the tax rates currently enacted for the future periods in which the temporary differences are expected to reverse.
What is the Asset / Liability Method
The method prescribed by FASB ASC 740-10 for recognizing deferred tax liability or asset. It emphasizes the balance sheet item—the deferred tax liability or asset is computed first (independently) and the tax expense is then computed as the change in the liability (asset)
What does a statement in changes in stockholders equity include?
- Column headings that identify individual stockholders’ equity accounts
- Events changing stockholders’ equity accounts
- The body of the statement presented in terms of the dollar impact of various transactions and events
- The impact of the transactions on the number of shares of stock, if any
- Ending balances that tie to the items presented in the stockholders’ equity section of the balance sheet on the same dates
What are Financing Activities on SCF - Non-Governmental?
It includes all transactions related to obtaining resources from owners and providing them with a return on, and a return of, their investment and to obtaining and repaying debt, including short-term and long-term debt, mortgages, capital lease obligations, seller-financed debt, and debt incurred to acquire treasury stock.
What are Financing Activities on SCF - Governmental?
In governmental accounting, there are two categories of financing activities reported on the cash flow statement of proprietary funds or governments engaged in business-type activities: “noncapital financing activities” and “capital and related financing activities.”
What are Investing Activities on SCF?
The category includes all transactions related to the making or collecting of loans and the acquiring and disposing of debt; equity instruments (of other entities); property, plant, and equipment; or a business unit.
What are Operating Activities on SCF?
Operating activities are all transactions and other events that are not investing or financing activities. Operating activities generally include transactions that enter into the determination of net income and include production and delivery of goods and services, interest and dividends received, and payment of interest.
What happens to inter-company Dividends?
Intercompany dividends are eliminated in consolidation.
What does a decrease in AR represent, relative to an accrual basis?
A decrease in accounts receivable is an increase in cash because cash must be received to decrease accounts receivable
What does a increase in AP represent, relative to an accrual basis?
An increase in accounts payable is an increase in cash because accounts payable was increased instead of making cash purchases.
Does GAAP or IFRS require more footnote disclosures?
IFRS (International Financial Reporting Standards) is principle-based, with fewer rules and standards than GAAP. Consequently, disclosure of the reasoning behind the information on the financial statements requires a great deal of footnote disclosure, including a footnote for accounting policies.
What does an increase in Inventory due to Operating Activities?
An increase in inventory will reduce the total amount of net income when calculating Net Cash provided by Operating Activities.
ow should the amortization of bond discount on long-term debt be reported in a statement of cash flows prepared using the indirect method?
Amortization of bond discount is noncash interest expense. Net income must be increased by noncash expenses that did not result from a cash outflow.
What is the SCF - Indirect Method?
It presents a reconciliation of net income to net cash provided by operating activities in all major classes of adjustments: accruals of expected future operating cash receipts and payments (receivables and payables), deferrals of past cash receipts and payments (inventory, prepaids, deferred income and expenses), noncash income/expenses (depreciation, amortization, provisions for bad debts), and gains and losses from transactions classified as investing or financing activities (sale of productive assets, sale of debt, liquidating dividend, retirement of debt). (FASB ASC 230-10)
What is Fair Value?
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between willing market participants at the measurement date.
What is Net Realizable Value?
Net realizable value is one of the attributes used to measure assets and liabilities. It is the nondiscounted amount of cash, or its equivalent, that is expected to be received (paid) on conversion (liquidation) of the asset (liability) in due course of business less direct costs.
What is Net Realizable Value used for?
Net realizable value is the settlement cost and is used for short-term receivables and some inventories, trade payables, and warranty obligations.
What is Comprehensive Income?
It includes all changes in equity during a period except those resulting from investments by owners and distributions to owners.
What is Deferred Revenue?
Deferred revenues are generally for deposits received in advance of doing the required work.
