Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

TOA / FAR > First Preboards (General) > Flashcards

First Preboards (General) Flashcards

1
Q

(T/F) What appears on the statement of comprehensive income (e.g. unrealized gains on debt investments at FVOCI) are cumulative balances.

A

False. For-the-period balances.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

Pro-forma journal entry to reclassify FVOCI to FAAC (debt investment)

A

Dr. UGL-OCI
Cr. FVOCI

Dr. FAAC
Cr. FVOCI

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

(T/F) Managerial accounting need not follow GAAP while financial accounting must follow them.

A

True.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

(T/F) Information provided by financial reporting pertains to individual business enterprises, rather than to industries, the economy, or members of society as consumers.

A

True.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

(T/F) Predictive value relates to both relevance and faithful representation.

A

False. Timeliness relates to both relevance and faithful representation.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

Financial statements including property with a carrying amount increased to management estimate of market value violates the concept of _________.

A

Faithful representation.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

(T/F) Purchase of treasury shares is included in comprehensive income.

A

False.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

(T/F) Earnings are synonymous to comprehensive income

A

False. Earnings refer to “profit/loss”. Thus they exclude certain gains and losses that are included in OCI.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

An entity records all sales using the installment method of accounting. Installment sales contracts call for 36 equal monthly cash payments. According to the conceptual framework, the amount of deferred gross profit relating to collections 12 months beyond the end of reporting period should be reported in the…

A

Current asset section as a contra account.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

How would the proceeds received from the advance sale of nonrefundable tickets for a theatrical performance be reported in the seller’s financial statements before the performance?

A

Unearned revenue for the entire proceeds.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

An entity received royalties from the assignment of patent to other entities. In the period in which the royalties are earned, the royalties should be reported as…

A

Revenue, not netted against amortization expense of patent.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

Under what condition is it proper to recognize revenue prior to the sale of the merchandise?

A

When the ultimate sale of the goods is at an assured sales price.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

How should an entity treat organization costs in the financial statements?

A

Expensed immediately.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

A change in the residual value of an asset depreciated on a straight-line basis arising because additional information has been obtained is…

A

A change in estimate, and should be reflected in the period of change and future periods if the change affects both.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

Presenting consolidated financial statements this year when statements of individual entities were presented last year is…

A

A change in reporting entity, restate F/S of all prior periods presented.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

An entity changed from an accounting principle that is not generally accepted to one that is generally accepted. The effect of the change should be reported, net of tax, in the current …

A

Retained earnings statement as an adjustment of the opening balance (error correction)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

An entity presents consolidated F/S in place of individual F/S. This represents a change in __________.

A

Reporting entity.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

(T/F) Changes in accounting policies may occur either when a change is required by an IFRS, or when it provides reliable and more relevant information.

A

True.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

(T/F) A change in accounting estimate is accounted for prospectively in the period of change and future periods.

A

True.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
20
Q

(T/F) When an investor uses the equity method to account for an investment in ordinary shares, the investment account of the investor would:

(a) Be increased by its share of the earnings of the investee
(b) Would not be affected by losses of the investee

A

False. Increased by share in earnings, and decreased by share in losses of investee.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
21
Q

An investor uses the equity method to account for investments in ordinary shares. The purchase price implies a fair value of the investee’s depreciable asset in excess of the investee’s net asset carrying amounts. The investor’s amortization of the excess…

A

Decreases the investment account (decreases SIANI).

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
22
Q

Trading securities should be reported at:

A

Fair value, with holding gains and losses included in earnings.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
23
Q

(T/F) The composite depreciation method does not recognize gain or loss on the retirement of single asset in the group.

A

True.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
24
Q

(T/F) Productive output depreciation is computed the same way as depletion.

A

True.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
25
Q

PPE should be valued using either (2)

A
  1. Cost model

2. Revaluation model

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
26
Q

An asset is being constructed for an entity’s own use, and has been financed with a specific new borrowing. The interest cost incurred during the construction period is…

A

A part of the historical cost of the acquisition of the asset to be written off over the estimated useful life of the asset.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
27
Q

(T/F) A long-lived asset should be tested for recoverability when events indicate that carrying amount may not be recoverable.

A

True.

28
Q

(T/F) The auditor’s recommendation, signed and dated as of the date of discovery is a required disclosure for impairment of long-lived assets.

A

False.

29
Q

(T/F) When the fair value is determinable, a nonreciprocal transfer of nonmonetary asset to another entity should be recorded at fair value of the asset transferred, and a gain or loss should be recognized on the disposal of the asset.

A

True.

30
Q

Which of the following statements describes the proper accounting for loss when nonmonetary asset is exchanged for other nonmonetary asset?

a. A loss can occur only when asset is sold or disposed of in a monetary transaction
b. A loss which is unrelated to the determination of the amount of the asset received should be recorded
c. A loss is deferred so that the asset received in the exchange is properly valued
d. A loss is recognized immediately because asset received should not be valued at more than the cash equivalent price.

A

D.

31
Q

(T/F) Goodwill acquired in a business combination is recorded at cost and tested for impairment every three years.

A

False. Tested annually and more often if certain events occur.

32
Q

(T/F) Costs of startup activities including organization costs should be expensed as incurred.

A

True.

33
Q

(T/F) Goodwill should be tested for impairment at the business-level.

A

False. Tested for each reporting unit.

34
Q

Which of the following is an example of activities that would typically be excluded from research and development costs?

a. Quality control during commercial production including routine testing of products
b. Laboratory research aimed at discovery of new knowledge
c. Design, construction and testing of production prototypes and models
d. Testing in search for or valuation of product or process alternatives

A

A

35
Q

An activity that would be expensed currently as research and development costs is the

a. Engineering follow-through in an early phase of commercial production
b. Legal work in connection with patent application and the licensing of patent
c. Testing in search for or evaluation of product or process alternatives
d. Adaptation of an existing capability to a particular requirement or customer need as a part of continuing commercial activity.

A

C

36
Q

(T/F) Development or improvement of techniques and processes is a research and development cost.

A

True.

37
Q

(T/F) Intangible assets with finite useful lives are amortized over their useful lives and subject to impairment testing.

A

True.

38
Q

(T/F) The cost and fair value models are available for intangible assets.

A

False. Cost and REVALUATION model.

39
Q

(T/F) When using the FV model for investment property, depreciation is not recognized.

A

True.

40
Q

(T/F) The cost and revaluation model are available for investment property.

A

False. Cost and FAIR VALUE model.

41
Q

When practicable to estimate, an entity must disclose the value of financial instruments at ____ value.

A

Fair value.

42
Q

A _____ provides the holder the right to sell at an exercise or strike price, anytime during a specified period. A gain accrues to the holder as the market price of the underlying falls below the strike price.

A

Put option.

43
Q

(T/F) A bank certificate of deposit is considered a derivative financial instrument.

A

False.

44
Q

A contract that has its settlement value tied to an underlying and a notional amount

A

Derivative financial instrument

45
Q

Any financial or physical variable that has either observable changes or objectively verifiable changes qualifies as

A

Underlying

46
Q

The most relevant measure for reporting financial instruments is ____ value.

A

Fair value.

47
Q

Are hybrid instruments always required to be bifurcated?

A

No. Measure these hybrid instruments at amortized cost, FVTPL, FVOCI if not required to bifurcate.

48
Q

(T/F) Equity shares qualify as underlying.

A

False.

49
Q

When an item is included in the calculation of net income in one year, and taxable income in a different year, a ______ difference occurs.

A

Temporary difference.

50
Q

(T/F) A deferred tax liability is recognized in the current year when temporary difference will result in future taxable amounts.

A

True.

51
Q

(T/F) Deficits accumulated during the development stage of an entity should be reported as part of shareholders; equity.

A

True.

52
Q

(T/F) The annual net earnings available to ordinary shareholders is reduced by annual interest and preference dividends.

A

True.

53
Q

(T/F) Collection of proceeds from a note payable is an investing activity in the SCF.

A

False. Financing.

54
Q

Deferred tax expense resulting from temporary differences related to depreciation should be presented in the SCF using indirect approach as a…

A

Addition to net income.

55
Q

(T/F) Cash effects of transactions involving making and collecting loans enter financing activities in SCF.

A

False. Investing activities.

56
Q

(T/F) Publicly traded enterprises are required to report on business segments.

A

True.

57
Q

(T/F) A required entity-wide disclosure is the identity of any major external customer.

A

False. The identity of the external customer need not be disclosed, only that a particular external customer transacts 10% or more of the total enterprise revenue.

58
Q

Enterprise-wide disclosures include information about w/c of the following:

  1. Products and services
  2. Geographical areas
  3. Major customers
A

All of the above.

59
Q

(T/F) In general, an entity preparing interim financial statements should use the same accounting principles followed in preparing the latest annual financial statements.

A

True.

60
Q

How should an entity report decision to change from cash basis to accrual basis?

A

Retrospectively, prior period adjustment net of tax by adjusting the beginning R/E.

61
Q

When projected benefit obligation exceeds fair value of plan assets, a ______ is recognized.

A

Pension liability

62
Q

Under IFRS, how is the discount rate for pensions determined?

A

By the market yield at the end of the reporting period for high-quality corporate bonds having a similar term or maturity

63
Q

(T/F) An advantage of the perpetual inventory system is that the record keeping is simple.

A

False. This is an advantage of the periodic system.

64
Q

(T/F) A disadvantage of the periodic system is that COGS includes both cost of inventory sold and inventory shortages.

A

True.

65
Q

Reserves for contingencies for general or unspecified risks should

A

Not be accrued in the F/S and NEED NOT be disclosed in the notes.

66
Q

An entity is the plaintiff in a patent infringement case. The entity has a high probability of a favorable outcome and can reasonably estimate the amount of the settlement. What is the proper accounting treatment of the patent infringement case?

A

Disclosure in the notes only.

TOA / FAR (8 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions