FRA Flashcards

You may prefer our related Brainscape-certified flashcards:
1
Q

What is the difference between the coupon payment and interest expense?

A

The Discount Amortization [concerning bonds at a discount]

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

The ________________ method recognizes profit corresponding to the costs incurred as a proportion of estimated total costs.

A

Percentage of Completion Method

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

Under US GAAP, the Completed Contract Method Recognizes Revenue when ____________.

A

The project is complete

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

The ________________ recognizes profit in proportion to cash collected.

A

Installmant Method

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

Profit from Sale of Equipment is _________ from Net Income when calculating Cash Flow from Operations

A

Subtracted, because it would then be counted twice in Cash Flow from Investments

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

Interest income is considered an Operating Cash Flow ONLY under __________.

A

U.S. GAAP

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

If a firm uses short-term debt to buy inventory, how is the current ratio and quick ratio affected, if current ratio > 1 and quick ratio < 1?

A

Both ratios will decrease

The increaes in current assets will be proportionally less than the increase in current liabilities, because they are both increased by the same amount.

The quick ratio will decrease because Cash, MSs, and AR all remain the same as Current Liabilities increases.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q
A
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

What are the four general categories to be considered in the formulas by credit ratigng agencies determiing the CAPACITY of a borrower to repay debt?

A
  1. Scale & Diversification
  2. Operational Effeciency
  3. Margin Stability
  4. Leverage
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

Under US GAAP, an asset is considered impaired if its Book Value is ________.

A

Greater than the sum of its UNDISCOUNTED cash flows.

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

Declaration of Dividends is unlike Dividends Paid, because ____________.

A

It appears as a decrease in Changes in Equity, as Dividends is a transaction between shareholders, so it does not appear in Changes in Equity and instead in the Cash Flow from Financing Actiivities.

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

How is Free Cash Flow to Firm calculated?

A

FCFF = CFO + Cash Paid to Interest after Taxes - CAPEX,
NOTE: CAPEX can be expanded to -FCinv - WCInv

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

Current Liabilities are obligations due within one year or the company’s operating cycle, whichever is ________.

A

Longer

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

Under US GAAP, when future cash collection cannot be reasonably estimated, the _________ should be used.

A

Installment Method

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

Under US GAAP, for LT projects, a firm should use _________ when payment is reasonably assured and the firm can reliably estimate the project’s outcome.

A

Percentage of Completion

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

Under US GAAP, for LT projects a first should use ___________ when the firm cannot estimate the outcome reliably.

A

Completed Contract Method

17
Q

Write-Downs of Inventory affect which part on the Income Statement?

A

Net Income

18
Q

Under US GAAP land owned by the firm is most likely to be reported on the BS at ________.

A

Historical Cost

19
Q

Under US GAAP, if it is more likely than not that some or all of the DTA will not be realized, then DTA must be reduced by a ___________, and if circumstances change, the net DTA can be increased by decreasing the valuation allowance, resulting in _____________.

A

Valuation Account; higher earnings

20
Q

According to IASB Framework for Financil Reporting, what are the 2 fundamental qualitative characteristics of Financial Statements?

A

Relevance & Faithful Representation

21
Q

How is COGSLIFO converted to COGSFIFO?

A

COGSFIFO = COGSLIFO - Change in LR

22
Q

A __________ occurs when LIFO firm’s inventory quanitities decline to an extant, and older costs are included in COGS

A

LIFO Liquidation

23
Q

How if LIFO Inv converted to FIFO Inv?

A

Add the LIFO Reserve to the LIFO Inventory on the balance sheet
[NOTE: not the change in LR]

24
Q

LIFO is not availble under _____.

A

IFRS

25
Q

When is an asset tested for impairment under IFRS? Under GAAP?

A

annually; events indicate the firm may not be able to recover the carrying value thru future use

26
Q

Revaluation Surplus is a component of _______, and does not affect _______. Under the Revaluation Model, there must be an ___________ to determine Fair Value under these circumstances.

A

[IFRS] equity, Net Income

27
Q

How is Interest Expense of an issued Bond calculated, for the period?

A

PVperiod of int exp • Mkt Int Rate

28
Q

The Amortization of a Premium or Discount bond is calculated as __________. If Amortization is Negative what was bond? if the Amortization is Positive, what was the bond?

A

Interest Expense - Coupon Payment = Amortization of the Bond
Beg. of Period Book Value * Mkt Interest - Coupon Payment = Amortization
———–
If negaitive - premium bond, and BV is decreased by the Amortization
If positive - discount bond, and BV is increased by the Amortization

29
Q

How is the Tax Base of an Asset calculated?

A

($OG Cost - Accum Depr) * Tax Rate

NOTE: that these are calculated for the short term, if its asking for depreciated tax base, and will reverse. If Accum Depr, has lowered the value to its Salvage Value, tax base in the future period is 0.