FAR Evaluation Deck

Question 1

To Calculate COGS what is the Formula?

Answer 1

Beginning Inventory
+
Purchases (two together give you COGS available for sale)
-
Ending Inventory

Question 2

For a Fixed Assets one should capitalize all costs ________ to put a fixed asset in ________, in the _________ condition, at the proper ________ for its __________ use.

Answer 2

necessary
place
required
time
intended

Question 3

Statement of Cash flow. Indirect Method adjusting NI. How do you handle an increase in AR and an Increase in AP? Which section would it fall under on statement of cash flow?

Answer 3

Increase AR Decrease Cash (cause its revenue you didn’t get cash for)
Increase AP Increase Cash (cause its an expense you didn’t pay cash for)
Operating

Question 4

FV method for an investment what would be shown on the income statement?

Answer 4

Dividends received, Change in FMV (Gain/Loss)

Question 5

Cash and Cash Equivalents. You’ll run into a tricky question on occasion when dealing with maturities of a CD. What’s the rule to remember?

Answer 5

You go off of the original maturity date and timeline. Not how soon it matures after the presentation date.

Question 6

5 Government Funds - Give me 5 letter acronym and what it stands for, the basis used, and the measurement focus

Answer 6

GRSPP
General, Special Revenue, Debt Service, Capital Projects, & Permanent
Modified Accrual
Current Financial Resources

Question 7

TBS - Bond. Walk me through what the payment period would be, interest % used, “Principal” number you would use, and Factor for a bond of $100,000 stated 5% rate and market (effective) rate of 8% 6-year bond with payments made semi-annual?

Answer 7

Interest: 12 periods (6x2), 4% rate (Market of 8%/2), Principal: $2500 payment ((5%/2)*Face of bond), Factor - PV factor of interest or an annuity on table

Principal: 12 periods (6x2), 4% rate (Market of 8%/2), Principal: $100,000, Factor - PV factor table

Question 8

TBS - Explain the entry for an investment, valuation (FMV) method, that is sold. 4 parts what are they?

Answer 8

Investment (at the price it was purchased), cash received, realized gain, valuation account

Question 9

TBS - On a discounted bond what’s the JE for Interest Revenue

Answer 9

cash and discount are debited the sum of these two is credited to Interest Revenue

Question 10

Direct Write-off method (inc/dec) on accounts written off and Increases in AR?

Answer 10

decrease, decrease

Question 11

What is NOT subject to the application of intraperiod income tax allocation?

Answer 11

Operating Income

Question 12

What does ARO stand for? How do you calculate the related accrection expense?

Answer 12

Asset Retirement Obligation
ARO ^^^ multiplied by the “Credit-adjusted risk-free interest rate”

Question 13

For inventory how do you handle a discount OR Shipping costs? (In terms of how that affects the value of the inventory)

Answer 13

you reduce by discounts and increase (add so basically capitalize) shipping costs

Question 14

How do you use the Gross Margin % to find cost of sales?

Answer 14

Its (1-Gross Margin %) multiplied by the sales amount to give you cost of sales

Question 15

What do you use to find Gross Profit (Think structure of a multi-step Income statement)?

Answer 15

Net sales minus Cost of Sales

Question 16

If you are applying the lower of cost or net realizable value and there are two different items with opposites of which is lower how do you decide and which value to use?

Answer 16

Add up all the original costs and then add all the NRV’s and whichever total is less use that one