FAR Deck 2

Question 1

When straight-line amortization is used for a bond, is the discount ALSO amortized at a straight-line amount along with the interest payable?

Answer 1

YES!

Question 2

For a non-governmental not-for-profit organization, investing activities in the statement of cash flows should include proceeds from the _______ of long-lived assets OR INSURANCE PROCEEDS associated with the loss of long-lived assets.

Answer 2

SALE

Question 3

Contribution revenue recognition for not-for-profit organizations is based on the concept of Satisfying ________

Answer 3

CONDITIONS

Question 4

A lease would be considered a finance lease if term of lease is equal to or greater than __% of of the estimated economic life of the asset.

Answer 4

75%!

Question 5

A lease would be considered a finance lease if WHAT is transferred to the lessee at the end of the lease?

Answer 5

OWNERSHIP

Question 6

A lease would be considered a finance lease if the lease contains a written purchase option that the lessee is _________ __________ to exercise.

Answer 6

REASONABLY CERTAIN

Question 7

A lease would be considered a finance lease if the asset will have no _______ _______ to the lessor at the end of the lease.

Answer 7

ALTERNATIVE USE

Question 8

A lease would be considered a finance lease if the present value at the beginning of the lease term of the “minimum lease payments” equals or exceeds ___ % of the Fair Value of the leased property.

Answer 8

90%

Question 9

Remember, a deferred tax asset or a deferred tax liability means it will be recognized in a _________ year.

Answer 9

FUTURE

Question 10

Cash for the acquisition of PROPERTY is what type of cash flow?

Answer 10

FINANCING, NOT INVESTING

Question 11

There is only one journal entry made under a noncompensatory stock option/purchase plan. This is when the employee purchases the stock. If the common stock purchased is above par value, additional paid-in capital is _________

Answer 11

CREDITED

Question 12

The Statement of Activities included separately displayed categories of program revenues. These categories include: Charges for Services, ________ Grants and Contributions, and __________ Grants and Contributions

Answer 12

OPERATING, CAPITAL

Question 13

Don’t forget that when it comes to Net Assets with donor restrictions, you are netting this against Net Assets WITHOUT donor restrictions. ALSO don’t forget that Quasi-Endowments are not actually _________, and are not included in the above calculation.

Answer 13

RESTRICTED

Question 14

Sales of works of art or purchases of works of art are __________ activities on the statement of cash flows

Answer 14

INVESTING

Question 15

Applying the lower of cost or market to each item separately results in the _______ inventory amount

Answer 15

LOWEST

Question 16

TRUE OR FALSE: The recorded capitalized interest cost may never exceed the actual interest costs incurred by an entity for a specific period.

Answer 16

TRUE

Question 17

A balanced budget demonstrates interperiod _______

Answer 17

EQUITY

Question 18

A change in the valuation technique used to measure fair value (example: changing from cost approach to market approach) is considered a change in __________ _________

Answer 18

ACCOUNTING ESTIMATE

Question 19

Don’t forget! Inventory Turnover is COGS divided by _________ inventory

Answer 19

AVERAGE

Question 20

For interim reporting purposes (10Qs etc) costs that benefit multiple periods should be expensed how?

Answer 20

ALLOCATED EQUALLY TO EACH PERIOD BENEFITED

Question 21

A discount on bonds payable is a __________ the bonds payable account on the balance sheet.

Answer 21

DECREASES

Question 22

For a gain (or loss) on the disposal of a segment, don’t forget to ________ the brokers free from the sales price.

Answer 22

SUBTRACT

Question 23

If a question says something like, “They believe they can only sell the segment for $2,500,000” or anything similar, this may be the questions way of giving you the _____ ______

Answer 23

FAIR VALUE

Question 24

Accounts Receivable Turnover = _______ / AVERAGE Accounts Receivable (net of allowance for doubtful accounts)

Answer 24

SALES (NET)

Question 25

Working Capital = Current Assets - ________ __________

Answer 25

CURRENT LIABILITIES

Question 26

Return on Equity = ( _________ ________ - Preferred Dividends) / Average Common Equity

Answer 26

NET INCOME

Question 27

Total Asset Turnover = _______ _______ / Average Total Assets

Answer 27

NET SALES

Question 28

Average Total Assets = Net Sales / ______ ______ _________

Answer 28

TOTAL ASSET TURNOVER

Question 29

Days in Inventory = Ending Inventory / ( ______ / 365 )

Answer 29

COGS

Question 30

Times Interest Earned = Income BEFORE interest expense and taxes / _______ _______

Answer 30

INTEREST EXPENSE