FAR - Deck 2 all units Flashcards
What does a gain on a receivable denominated in foreign currency indicate in terms of foreign currency units exchanged for a dollar?
A gain on a receivable denominated in a foreign currency results when the fixed amount of the foreign currency can be exchanged for a greater number of dollars at the date of collection, that is, when the number of foreign currency units exchangeable for a dollar decreases.
What is the criteria that must be met for a contract with a customer to be accounted for under the revenue recognition standard (ASC 606)?
A contract is accounted for under the revenue recognition standard if all the following criteria are met:
(1) The contract was approved by both parties,
(2) the contract has commercial substance, (3) each party’s rights regarding (a) goods or services to be transferred and (b) the payment terms can be identified, and
(4) it is probable that the entity will collect the consideration to which it is entitled according to the contract.
What does a loss on a payable deonminated in a foreign currency indicate in terms of the number of foreign currency exchanged for a dollar?
A loss on a payable denominated in a foreign currency results when the number of dollars needed to purchase the fixed amount of the foreign currency increases, that is, when the number of foreign currency units exchangeable for a dollar decreases.
What is the equity method?
The equity method is the difference between the cost of the investment and the investor’s equity in the FV of the investee’s net assets.
What is the measurement alternative method?
It is cost minus any impairment plus or minus changes resulting from observable price changes for the identical or a similar investment of the same issuer.
What is the 5 step model to recognizine revenue from contracts with customers?
1) Identify the contract with the customer
2) Identify the performance obligations in the contract
3) Determine the transaction price
4) Allocate the transaction price to the performance obligations in the contract
5) Recognize revenue when or as an obligation is satisfied
In the input method of revenue recognition, when one cannot reasonably estimate the total expected costs of the construction and cannot reasonably estimate the progress toward completion, what amount of revenue should be recognized?
When the outcome of the contract is not reasonably measurable, but the costs incurred in satisfying the performance obligation are expected to be recovered, revenue must be recognized only to the extent of the costs incurred.
Revenue recognized is based on a zero profit margin until the entity can reasonably measure the outcome of the performance obligation
If a publicly traded company is a large accelerated filer within how many days must its 10-Q be filed with the U.S. SEC?
40 days
How should a transactions that is unusual in nature or infrequent in occurrence be reported?
As a component of Income from continuing operations NOT net of applicable income tax
What is the formula to compute ending A/R?
Beg. A/R (PY end bal.)
Plus: Credit sales
Minus: Sales Ret & Allowances
Minus: Collections
Minus: Write Offs
= End. A/R
What is the formula to compute ending Trade receivables?
Beg. Trade receivable
Plus: Sales (net 30) **Do not incl. cash sales
Minus: Collections during period
= Open trade receivables reported
Under the LCM rule, how is inventory that is accounted for using the LIFO or retail inventory method is measured?
Lower of cost or current replacement cost
Assuming constant inventory quantities, which inventory-costing method will produce a lower inventory turnover ratio in an inflationary economy?
FIFO
What type of relationship does EI have with COGS?
Inverse relationship
What type of relationship does COGS have with GP?
Inverse relationship
What type of relationship does EI have with GP?
Direct relationship
What is the easiest way for a company to overstate profit?
By overstating EI
What is the effect of EI being overstated on the financial statements and line items?
If EI is overstated, GP is overstated, NI is overstated, Retained Earnings is overstated, Total S/E is overstated
Name the government fund types in governmental accounting.
1) General fund 2) Special Revenue Funds, 3) Debt service funds 4) Permanent fund, and 5)Capital projects Funds
Name the different funds under the Proprietary funds in government accounting.
1) Enterprise funds 2) Internal Service funds
Name the funds under the Fiduciary fund types in government accounting.
1) Pension (and other employee benefit) trust funds, 2) Investment trust funds 3) Private-purpose trust funds, 4) Custodial funds (formerly known as Agency funds)
What is the measurement focus of the governmental funds?
Current financial resources measurement focus
A special revenue fund is used to account for what type of proceeds of specific revenue sources?
Restricted or committed proceeds of specific revenue sources (not for private purpose trust or capital projects)
What type of activities that the Enterprise funds account for?
Activities that benefit outside parties, (the reporting government is not the predominant participant) who are willing to pay for them, such as parking garages and utilities.
What is a tax provision for income tax?
A tax provision is the estimated amount of income tax that a company is legally expected to pay to the IRS for the current year.
What type of transaction (s) would result in a decrease in cash flow measured under the indirect method of preparing a SCFs?
1) A decrease in a payable
2) An increase in a current asset
What are debt (bond) issue costs to bring debt to market?
1) Printing and engraving
2)Legal fees
3) Accountant’s fees
4) Underwriters commission
5) Registration fees and
6) Promotion costs
What is the measurement focus of fund based financial statements of a governmental funds?
The measurement focus is current financial resources, specifically financial position and changes in financial position.
What is the measurement focus of the government-wide statements, proprietary funds, and fiduciary funds?
The measurement focus is economic resources
What type of activities are undertaken in the Enterprise fund?
1) Government business type activities
2) Defined customer groups
3) Generally financed through fees (ex utilities)
In income tax basis of accounting how is a contingent liability recognized?
Contingent liabilities are recognized in the period the related expense is deductible under tax law.
