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FAR Y1-100 Flashcards

1
Q

A bond’s contract rate = market rate. How much will the bond sell for?

A

Its maturity value

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2
Q

A creditor who receives an asset to settle debt records the asset at what amount?

A

FMV

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3
Q

An entity declares stock dividend of > 20-25% of the outstanding stock. How should this be recorded?

A

Debit retained earning for Par Value of the stock dividend.

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4
Q

An entity using IFRS decides to present interim Financial Reports. Name the F/S that must be included.

A

Stmt of Financial Position, Stmt of Comprehensive Income, Stmt of Chgs in Equity, Stmt of Cash Flows

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5
Q

Are comparative F/S required for not-for-profit entities?

A

No.

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6
Q

Are debenture bonds secured?

A

No

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7
Q

Are financial forecasts prepared for limited use only?

A

Financial Forecasts can be prepared for General Use or Limited Use

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8
Q

Are interco transactions eliminated in segment reporting?

A

No

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9
Q

Are normal costs for freight-in, handling, & spoilage included in the cost of inventory?

A

Yes. Normal costs are included in inventory. (Abnormal costs are not, & are period costs.)

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10
Q

Are operating leases disclosed on the B/S?

A

No.

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11
Q

Are significant non-cash investing & financing activities required to be disclosed under IFRS?

A

Yes, disclosure must be made in the footnotes (GAAP allows either footnote or on Stmt of Cash Flow)

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12
Q

Assets contributed into a partnership are recoreded by the partnership at what amount?

A

FMV

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13
Q

At what amount are Trading Securities presented on the B/S?

A

Fair Market Value (TS = FMV)

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14
Q

At what point does an entity, susing installmet sales method, recognize revenue?

A

As cash is collected

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15
Q

Can a fixed asset held for sale, with an impairment loss, be written up again under GAAP?

A

Yes, up to the amount written down.

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16
Q

Define a change in acctg principle.

A

A change from one GAAP method to another (Exceptions: Depr, Amort, Depl)

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17
Q

Define a component unit.

A

Legally separate organization for which the primary govt is financially accountable.

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18
Q

Define assigned fund balance.

A

Resources the govt is planning to spend, but not yet decided by the decision making authority

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19
Q

Define convertible preferred stock.

A

It allows the holder the option to convert their PS into CS.

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20
Q

Define Current Assets.

A

Resources that are expected to be realized in cash, sold, or consumed during the normal op cycle.

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21
Q

Define non-controlling interest.

A

Equity in aquired entity that acquirer did not obtain

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22
Q

Define the term functional currency.

A

The currency of the primary economic environment in which the entity operates

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23
Q

Describe each type of subsequent event and their treatment in the F/S.

A

1.Recognized-existed, but not resolved as of B/S date, Non-recognized.

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24
Q

Disclosure is required for major customers. How is a major customer determined?

A

10% or more of consolidated revenue

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25
Q

Dividends rec’d by investor using cost method (owns

A

Income

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26
Q

Does an entitiy that is a Development Stage Entity use US GAAP?

A

Yes. The entitiy’s F/S are required to be identified as development stage entity.

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27
Q

Does IFRS allow for investment property to be valued at FMV?

A

Yes. Investmt prop may be valued at FMV. It is accounted forr separately from PP&E.

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28
Q

Does IFRS permit the use of ‘push-down’ accounting?

A

No. Not permitted.

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29
Q

Does preferred stock generally have the same voting rights as common stock?

A

Preferred Stock generally does not have any voting rights

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30
Q

Does the non-controlling interest receive any allocation of NI and/or dividends of the subsidiary?

A

Yes, a proportionate share of Net Income and/or dividends.

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31
Q

Does use of direct or indirect method of cash flows have an effect on investing & financing sections of CFS?

A

No. Use of direct or indirect only effects the operating activities section of the Stmt of Cash Flows.

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32
Q

During a period of rising prices, which inventory cost flow method provides a larger profit & End Inv?

A

FIFO

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33
Q

F/S that are remeasured create a gain or loss. Where is the gain/loss recorded?

A

Remeasurement gain or loss is recorded on the I/S

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34
Q

Fiscal accountability is associated with which financial statements?

A

Fund financial statements

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35
Q

How are assets & liabs presented on a personal F/S?

A

Assets and Liabs are presented at estimated current value

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36
Q

How are deferred tax items classified under IFRS?

A

All deferred tax items are classified as non-current. (IFRS doesn’t allow for current deferred taxes)

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37
Q

How are inventories valued under IFRS?

A

Lower of cost or Net Realizable Value (IFRS NRV=Est Selling Price-Est Cost to Complete & Sell)

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38
Q

How are prior period adj presented on the F/S under US GAAP?

A

Net of Tax

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39
Q

How do you calculate the Number of Days in the Average Inventory?

A

365//Inventory Turnover

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40
Q

How does a lessee calculate the PV of future min lease payments?

A

Discount future pmts using lesser of: Incremental borrowing rate or Lessor’s implicit rate (if known by lessee)

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41
Q

How does a lessee record a capital lease?

A

As an asset & Liab on B/S at PV of min lease pmts

42
Q

How does an entity determine if a segment is a reportable segment?

A

> 10%: Revenue, |sum of all segments having Profit/or sum of those w/Loss|, Assets

43
Q

How is a deferred item caused by a loss carryforward classified?

A

Net operating loss carry-fwds are always future deductible amts and are deferred tax assests

44
Q

How is an investment in a closely held business presented on personal F/S?

A

Appraised Value

45
Q

How is current ratio calculated?

A

Current Assets // Current Liabs

46
Q

How is non-controlling interest measured under GAAP?

A

Beg Bal NC interest + minority SH% of NI of acquiree - minority SH% of div pd by adquiree=End Bal NC interest.

47
Q

How is non-controlling interest measured under IFRS?

A

2 Options: 1. FV, 2. Proportional share of value of identifiable assets and liabs of the acquiree.

48
Q

How is PP&E shown on the Balance Sheet?

A

Net Book Value (Cost - Accum Depreciation)

49
Q

How is profit/loss from a partnership divided among the partners?

A

According to their agreement, or else evenly.

50
Q

How is the deferred gross profit on an installment sale recorded?

A

Ending Installment Sales Receivable * GP%.

51
Q

How is the discount or premium accounted for when a bond is issued?

A

Amortized over life of the bond.

52
Q

How is the inventory turnover ratio calculated?

A

COGS // Avg Inventory

53
Q

How is the Stmt of Cash Flows per GASB different from FASB?

A

Direct method only, recon of op inc & net cash flow from op act. Op, noncap fin, ca & related fin, & invest. Categories; cash rec for int is investing, cash pd for int is financing, purch of cap assets is fin

54
Q

How long should a patent be amortized?

A

Shorter of: 1. Legal life, or 2. Useful life

55
Q

How many years may an operating loss be carried back?

A

2 years; if loss remains, it can be carried fwd 20 years: 2 back/20 fwd = operating loss

56
Q

How often are interim reports required to be filed under IFRS?

A

IFRS doesn’t require interim reporting

57
Q

How should a deferred tax asset be presented on the B/S?

A

The deferred tax asset should be presented net of the allowance.

58
Q

If a sales lease-back transaction is considered to be major, how is the gain or loss recorded?

A

Gain is deferred up to PV of lease paymts. If capital lease,amortize gain as reduction to depreciation: OW-life; NS-lease

59
Q

If a loss contingency can be reasonably estimated, & likelihood is reasonably possible, should it be accrued?

A

No, footnote only. Events that are probable are accrued.

60
Q

If FV of asset aquired in a non-monetary exchange cannot be determined, the asset is recorded at__?

A

Book Value

61
Q

In a defined benefit pension plan, what are the 5 components that make up pension expense?

A

Svc Costs, Interest, Return on plan assets, Amort of Prior Svc Costs, Gain/Loss

62
Q

In order to recognize a nonmonetary exchange in the entity’s FS, what must the transaction have?

A

Commercial Substance

63
Q

In what situations is a blended component unit presentation appropriate?

A

1Gov body of org ? primary gov 2PGMgmt has operational responsblty 3Org svc only for PG 4.Org’s debt covered by PG

64
Q

Information that is a faithful representation has what 3 characteristics?

A

Neutral, Complete, & Free From Error

65
Q

Inventory must be recorded at LCM if the utility of the goods is

A

Replacement Cost, limited to ceiling of NRV (Sell $-Cost to complete & sell) and floor of NRV- PM

66
Q

Investing activities section of Stmt of Cash Flows generally includes items from which B/S sections?

A

Noncurrent assets

67
Q

Is comparative info required on GAAP F/S?

A

No. Comparative F/S are required by IFRS and SEC

68
Q

Is freight out considered to be a product cost?

A

No, it is a selling expense, which is a period cost

69
Q

Is the Comprehensive Annual Financial Report required by GASB?

A

No, it is optional.

70
Q

Is the loss on the inventory write down added back in the operating section of the Cash Flow Stmt?

A

No. This loss is an exception and is not added back.

71
Q

Name 2 exceptions the the general rule regarding R&D costs.

A
  1. Fixed assets that have alternative future uses 2. R&D performed under contract for another entity
72
Q

Name several ways that an entity could segment their financial info.

A

Service/Product Line, Geographic Area, Entity Type, or by the Type of Customer

73
Q

Name some examples of derivative instruments.

A

Swaps (interest rate & currency), Options (call & put), Futures contracts, & Forward Contracts.

74
Q

Name some examples of permanent differences.

A

Municipal Bond Int; Life Insur Premium/entity is beneficiary; Fed Income Tax, Dividend Recd Deduction

75
Q

Name the 10 elements of financial statements as described in SFAC 6.

A

Comprehensive Income, Revenues, Expenses, Gains, Losses, Assets, Liabs, Investments by owners, Distributions to owners.

76
Q

Name the 2 methods for amortizing a bond discount or premium.

A

Effective Interest Method and S/L Method.

77
Q

Name the 2 requirements for a creditor to reclass debt restructuring as troubled debt.

A

The restructuring is a concession by the creditor and the debtor is having financial difficulties.

78
Q

Name the 2 requirements for an item to be “Discontinued Operations”.

A
  1. On-going operations & cash flows have or will terminate, 2. entity will not take part in any signifant operations of disco segment
79
Q

Name the 2 stmts that are generally included in personal f/s.

A

Stmt of Financial Condition & Stmt of Changes in Net Worth

80
Q

Name the 2 types of debt restructuring.

A

Modification of terms & Settlement of debt for less than the carrying amount

81
Q

Name the 2 types of revenue earned on an installment sale.

A

Realized Gross Profit and Interest Income

82
Q

Name the 3 approaches to measuring Fair Value.

A

Market Approach, Cost Approach, Income Approach.

83
Q

Name the 3 criteria that must be met to classity items as “Collections”.

A
  1. Held for exhibition, research, education, not for gain 2. Cared for & preserved 3. Sale proceeds reinvested to other collection items
84
Q

Name the 3 features of derivative instruments.

A

1.Underlying & 1 or more notional amts 2. No/minimal investmt 3. Settlement

85
Q

Name the 3 IFRS methods for accounting for treasury stock.

A

Cost Method, Par Value Method, & Constructive Retirement Method (IFRS only)

86
Q

Name the 3 major sections of the CAFR

A

Introductory Section, Financial Section, and Statistical Section

87
Q

Name the 3 proper titles for the financial statements included in the Proprietary Funds.

A

Stmt of Net Position, Stmt of Rev, Expenses, & Changes in Fund Net Position, Stmt of Cash Flows (only for Prop Funds)

88
Q

Name the 3 sections of the Stmt of Cash Flows under GAAP.

A

Operating, Investing, and Financing

89
Q

Name the 4 non-exchange revenues.

A

Imposed, Derived, Govt Mandated, Voluntary

90
Q

Name the Enhancing Qualitative characteristics of acctg info.

A

Comparability, Verifiability, Timeliness and Understandability

91
Q

Name the financial statements that are included in the Govt-Wide FS.

A
  1. Statement of Net Position and 2. Statement of Activities
92
Q

Name the primary users of Government F/S.

A

Citizenry, Legislative/Oversight body, Creditors & Investors

93
Q

Name the significant requirement of the integrated approach.

A

A reconciliation between the govt-wide FS & the Fund FS is required.

94
Q

Non-controlling interest is shown in which scetion of the B/S?

A

Equity section

95
Q

Operational accountability is measure in which financial statements?

A

Government-wide financial statements

96
Q

Over what period of time is a Cap Lease Amort/Depr:Ownership, Bargain Purch, 90% FV, 75% Life?

A

Ownership & Bargain Purch: over life of asset. 90% & 75%: over lease term.

97
Q

Provide an example of a contribution that would be recorded at FV.

A

All contributions are recorded at FV on the date of the contribution

98
Q

Provide examples of what may be included in the general fund.

A

General Government, Public Safety, Recreation,etc. IT accounts for all financial resources not included in another fund.

99
Q

Revaluation of fixed assets is allowed under GAAP and IFRS. True or False?

A

False. Only IFRS.

100
Q

SEC requires that an entity’s F/S present how many I/S & how many B/S?

A

3 Income Statements, 2 Balance Sheets (Not required by GAAP)

FAR (22 decks)

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