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CPA > Final FAR Review Deck > Flashcards

Final FAR Review Deck Flashcards

1
Q

What application should be used for estimate changes?

A

Prospective Application

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2
Q

What application should be used for accounting principle changes?

A

Retrospective Application

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3
Q

What application should be used for error correction changes?

A

Retrospective Application

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4
Q

What is prospective application?

A

(going forward only)

This is used with changes in estimates

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5
Q

What is retrospective application?

A

(going back in time)

This is used with changes in accounting principle, AND for the correction of errors

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6
Q

What does comprehensive income include?

A

net income + other comprehensive Income = comprehensive income

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7
Q

What does other comprehensive income include?

A

PUFIER

  • Pension Adjustments
  • Unrealized gains and losses (available-for-sale debt securities)
  • Foreign Currency Items
  • Instrument-specific credit risk
  • Effective Portion of Cash Flow Hedges
  • Revaluation Surplus (IFRS Only)
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8
Q

How to convert cash-basis to accrual-basis?

A
  1. Add increase to current assets
  2. Subtract decreases in current assets
  3. Add decreases in current liabilities
  4. Subtract increases in current liabilities
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9
Q

What is the current ratio equation?

A

Current ratio=Current assets/Current liabilities

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10
Q

What is the quick ratio equation?

A

Quick ratio=Cash & cash equivalents+Short-term marketable securities+ (Receivable net - AFUC) /Current liabilities

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11
Q

What is the accounts receivable turnover equation?

A

Accounts receivable turnover=Sales (net)/Average accounts receivable (net)

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12
Q

What is the inventory turnover equation?

A

Inventory turnover=Cost of goods sold/Average inventory

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13
Q

What is the days in inventory equation?

A

Days in inventory=Ending inventory/(Cost of goods sold/365)

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14
Q

What is the accounts payable turnover equation?

A

Accounts payable turnover=Cost of goods sold/Average accounts payable

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15
Q

What is the asset turnover equation?

A

Asset turnover=Sales (net)/Average total assets

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16
Q

What is the profit margin equation?

A

Profit margin=Net income/Sales (net)

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17
Q

What is the return on assets (ROA) equation?

A

Return on assets=Net income/Average total assets

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18
Q

What is the return on equity equation?

A

Return on equity=Net income/Average total equity

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19
Q

What is the return on sales equation?

A

Return on sales=Income before interest income Interest expense, and taxes/Sales (net)

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20
Q

What is the debt-to-equity equation?

A

Debt-to-equity ratio=Total liabilities /Total equity

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21
Q

What is the total debt ratio equation?

A

Total debt ratio=Total liabilities/Total assets

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22
Q

What is the operating cash flow ratio equation?

A

Operating cash flow ratio=Cash flow from operations/Current liabilities

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23
Q

What is the equation for sales revenue?

A

Sales Revenue=Credits to sales revenue/Sales tax plus one

24
Q

What is the working capital turnover equation?

A

Working Capital Turnover = Sales/Average working capital

25
Q

DEAD

A

Debit
Expense
Assets
Dividend

26
Q

CRLS

A

Credit
Revenue
Liabilities
Stockholders equity

27
Q

How do you calculate the cost of goods sold?

A 
Beginning Inventory
\+Purchases 
=Goods available for sale
-Ending Inventory
=Cost of goods sold
28
Q

What is a large accelerated filer and when do they need to file there 10-K & 10-Q?

A

A large accelerated filer is a company with a market value of $700 million or more

  • File the 10-K within 60 days of fiscal yearend
  • File the 10-Q within 40 days of the end of the quarter.
29
Q

What is an accelerated filer and when do they need to file there 10-K & 10-Q?

A

An accelerated filer is a company with a market value between $75 and $700 million

  • File the 10-K within 75 days of fiscal
  • File the 10-Q within 40 days of the end of the quarter.
30
Q

What is a nonaccelerated filer and when do they need to file there 10-K & 10-Q?

A

A nonaccelerated filer is a company with a market value of less than $75 million.

  • File the 10-K within 90 days of fiscal year
  • File 10-Q within 45 days of the end of quarter.
31
Q

FIFO (First in, first-out)

A

When prices are rising using FIFO, COGS is the lowest and provides the highest net income, also the highest ending
inventory.

32
Q

LIFO (Last in, first-out)

A

When prices are rising using LIFO, this gives the highest COGS and lowest net income, and the lowest ending inventory

33
Q

Should legal fees & other costs associated with registering a patent be capitalized or expensed?

A

Capitalized

34
Q

Should Research & development cost be capitalized or expensed under US GAAP?

A

Expensed

35
Q

What is the index equation?

A

Index equation=Ending Inventory at current yr cost/Ending inventory at base yr cost

36
Q

What is the perpetual inventory system?

A

A perpetual system records the purchases and sales of inventory items as they occur. Physical count still takes place to verify the inventory.

37
Q

What is the periodic inventory system?

A

A periodic system records inventory by a physical count usually done annually

38
Q

When does an exchange have commercial substance?

A

An exchange has commercial substance if the future cash flows change as a result of the transaction The fair value approach is used and gain/losses are recognized.

39
Q

When does an exchange lack commercial substance?

A

An exchange lacks commercial substance if the projected cash flows after the exchange are not expected to change significantly.

40
Q

When should you record a gain or losses that lacks commercial substance?

A

You would record a gain when:
- The boot is received = Recognized proportional gain (< 25 percent rule)
You would record a loss when:
- A loss is indicated

41
Q

How do you find out noncontrolling interest (NCI)?

A

NCI=Fair value of subsidiary * NCI%
or
NCI=Fair value of the subsidiary - Acquisition cost

42
Q

How do you find out noncontrolling interest (NCI) under IFRS?

A

NCI = FV of subsidiary net assets * NCI%

43
Q

Should you value equity securities at fair value & carrying value?

A

Fair Value

44
Q

Should available for sale securities at fair value & carrying value?

A

Fair value

45
Q

What are serial bonds?

A

They are bonds that mature at staggered intervals

46
Q

What is the statement of financial position?

A

The statement of financial position is the balance sheet for not for profit (NFP) organization
Note: Net position instead of stockholders equity, since there are no shareholders in the NFP

47
Q

What is the statement of activities?

A

The statement of activities is the income statement for not for profit (NFP) organization

48
Q

What are the financial statements for a not for profit?

A

Statement of financial position
Statement of activities
Statement of cash flows

49
Q

What are some examples of current assets?

A
  • Cash
  • Inventory
  • Prepaid expenses
  • Accounts receivable
  • Short term investments
50
Q

What are some examples of long-term assets?

A
  • Property, plant, and equipment
  • Investments
  • Goodwill
  • Patents
51
Q

What are some examples of short-term liabilities?

A
  • Accounts payable
  • Short term debt
  • Bonds or dividends payable within the next year
  • Income tax payable
  • Accrued expenses
  • Deferred revenue
52
Q

What are some examples of long-term liabilities?

A
  • Notes payable
  • Capital lease obligations
  • Bonds payable (noncurrent)
53
Q

What is included in the significant accounting policies?

A

• A company’s revenue recognition policies
• How a company determines what investments are cash
equivalents
• How a company prices their inventory
• Methods for amortizing intangibles

54
Q

What are the three fund types?

A
  • Governmental fund (Modified Accrual), Financial Resource measurement focus
  • Proprietary fund (Accrual), Economic Resource Measurement Focus
  • Fiduciary fund (Accrual), Economic Resource Measurement Focus
55
Q

What do government funds include?

A 
GRaSPP
-General Fund
-Special Revenue
and
-Debt Service Fund 
-Capital Projects Fund
-Permanent Fund
56
Q

What do proprietary funds include?

A

SE

  • Internal Service
  • Enterprise
57
Q

What do Fiduciary funds include?

A

CIPPOE

  • Custodial Fund
  • Investment Trust Fund
  • Private Purpose Trust Fund
  • Pension (and other employee benefits) trust Fund

CPA (3 decks)

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