Financial Reporting v2 Flashcards

1
Q

Revenues from Contracts with Customers excludes:

Updated for FASB ASC 606

A

Insurance Contracts
Lease Contracts
Financial Instruments
Contracts with Non-customers

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2
Q

Revenue Recognition Steps (COPAS) means…

A
Contract
Obligations 
Price
Allocate
Satisfies
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3
Q

What are the 5 contract elements Revenue Recognition?

A
-Commercial Substance
o Rights to Goods/Services Identified
o Approval & Commitment by Each Party
o Payment Terms Identified
o Collection is Probable
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4
Q

What is revenue?

A

Inflows of assets from central/main activities of the business

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5
Q

What is Gains?

A

Increase in equity from an activity or event that is NOT central to the main activities of the business.

(Can be operating or non-operating)

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6
Q

What is a loss?

A

Decrease in equity from an activity or event that is not central to the main activities of the business.

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7
Q

What is the operating cycle?

A

Average time to turn materials/services to cash

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8
Q

Revenue: Cash to Accrual Basis (SPEAR-BAR)

A

Sales (i.e. Customer Payments)
+Ending Accounts Receivable
–Beginning Accounts Receivable
Sales Revenue on an Accrual Basis

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9
Q

COGS from Cash Basis (CRAP-I)

A

Cash Remitted (i.e. paid – made acronym easier)
+Increase in Accounts Payable
–Increase in Inventory
COGS on an Accrual Basis

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10
Q

Discontinued Operations and its processes..

A

Company ceases operating a business segment
§ Must represent a strategic shift
• Major effect on operations and financials
o Disposal Assets must be
§ Held for Sale
37
§ Sold
§ Disposed of another way
o Includes
§ Income (or Loss) from the period
§ + Gain (or Loss) from disposal
o Reported
§ Net of Tax after Continuing Operations in
the period it’s classified as held for sale and
all prior periods presented in the financial
statements

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11
Q

Unusual or Infrequent Items

A
Formerly Extraordinary Items
o Two Options for Reporting
§ Income Statement
• Above Income from Continuing
Operations
§ Footnotes to Financial Statements
o Change: No longer net-of-tax
o Treatment in Financial Statements
§ Retrospective or Prospective Treatment
38
• Additional disclosures required for
previous extraordinary classifications
Ø Constant Dollar Accounting
o Uses CPI to adjust assets to reflect a consistent
level of purchasing power due to inflation
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12
Q

Expenses are recognized when…

A

Incurred

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13
Q

If expenses are not yet paid we…

A

Accrue them

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14
Q

General and Administrative (G&A) Expense or (SG&A) include..

A

Office staff salaries, rent, and supplies
§ Sales staff salaries and portions of the
building assigned to Sales should be allocated
to Selling Expense, not G&A

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15
Q

Interest on projects (Software) for internal use is not expensed, but instead is..

A

capitalized

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16
Q

Essential characteristics of an asset…..

A

Provides future benefits
Owned/controlled today
Result of past transaction

17
Q

The IASB conceptual framework addresses which of the following concepts of capital?

A

Financial and Physical

18
Q

What is the most authoritative GAAP

A

The FASB statements of Financial Accounting Standards (SFAS)

19
Q

How do you calculate COGS?

A

Beg Inv + purchases - writeoffs - closing inventory