FAR - FASB - Role & Standard Setting Process - Financial Statements Flashcards
Name the two different formats of presentation for the balance sheet.
Account form and Report form.
Where and how are prior period adjustments shown?
Statement of Retained Earnings as adjustments to the beginning balance of retained earnings in the year that the error is discovered.
How are assets presented on the balance sheet?
Assets are presented in order of decreasing liquidity. The most liquid assets (such as cash) are show first, and less liquid assets are shown last (such as PP&E).
What is the purpose of the Statement of Cash Flows?
To explain the change in cash and cash equivalents that has occurred during the past accounting year.
How are long-term assets and liabilities defined?
By exclusion from current assets and current liabilities.
How is owner’s equity presented on the balance sheet?
In order of permanence.
How are liabilities presented on the balance sheet?
Liabilities are shown in order of maturity. Current liabilities are presented first, and then, long-term liabilities are presented.
What approach is used when financial statements are prepared?
The all-inclusive approach.
What are the items in other comprehensive income?
Unrealized gains/losses on investments in securities available for sale, certain pension cost adjustments, and unrealized gains/losses on certain hedging activities.
What are current liabilities?
Liabilities that are due in the upcoming year or the operating cycle of the business, whichever is longer and which will be met through the transfer of a current asset or the creation if another current liability.
What are cash equivalents?
Short-term investments that are convertible into a known and fixed amount of cash and have an original maturity to the purchaser of three months or less.
What are the categories that are listed on the Statements of Cash Flows?
Operating, Investing, Financing.
