frameworks notes

Question 1

3 main aspects of financial reporting that GAAP addresses

Answer 1

1. recognition
2. measurement
3. disclosure

Question 2

what organization is this?
a private sector body that establishes GAAP
there are 7 full time members.
to improve the usefulness of financial reporting, address deficiencies, and promote international convergence

Answer 2

FASB

Question 3

this is the formula of what process?
1. take the balance on the bank statement
add deposit in transti
add cash on hand
less outstanding checks
\+/- errors made by the bank
equal the true ending cash balance

Answer 3

bank reconciliation

Question 4

the allowance is a contra to AR
1. income statement approach
i. estimates bad debt as a % of SALES, and it directly calculates the amount of bad debt expense/
2. b/s sheet approach
this approach estimates bad debt allowance as % of AR instead of sales

Answer 4

allowance method.

Question 5

what is included in the inventory

Answer 5

included
1, purchase returns.
2. freight-in
3. sales tax on acquisition
3. insurance on transit.
excluded
1. freight out-selling expense
2. interest on purchase-this is financing.

Question 6

gross margin method

Answer 6

sales-cost=margin

Question 7

retail inventory method

Answer 7

used by retailers to estimate the cost of ending inventory
1 calculate ending inventory at retail prices
2. calculate the cost to retail ratio (COGAS at cost per COGAS at retail)
3. apply cost to retail ratio to ending inventory at retail prices to get ending inventory at cost.

Question 8

inventory equation

Answer 8

1. beg inventoy
   add: purchase
   equals: goods available for sale
   less: ending inventory
   equals: COGS

Question 9

valuation of capital assest: what are the general rules

Answer 9

plant assets should be valued at the market value of the consideration given for the asset. or the market value of the asset- which ever is more readily available.

Question 10

the funded status of a defined benefit pension plan for a company should be reported in?

Answer 10

the stmt of financial position

Question 11

under IFRS, which measurements is allowed to estimate and report the liability for the cost of settling a lawsuit

Answer 11

best estimate to settle and discount amounts of estimated loss to present value.

Question 12

financial statements may be prepared using a comprehensive basis of accounting other than generally accepted accounting principles, is modifying items on the cash flow statement based on definite criteria acceptable?

Answer 12

no, without including all material items n the f/s and modifications that do not substantial support would not be qualify as as a special purpose framework.

Question 13

Predict and confirm your material value once you pass

Answer 13

fundamental qualitative characteristics: relevance: capable of making a difference.

Question 14

completely neutral is free from error

Answer 14

fundamental qualitative characteristics: faithful representation: represent the reported economic phenomena

Question 15

compare and verify in time to understand

Answer 15

enhancing qualitative characteristics.

Question 16

segment reporting

Answer 16

when a customer constitute more than 10% of the total enterprise revenue, you are required to disclose your reliance on them.

Question 17

both US GAAP and IFRS allow a separate statement of comprehensive income or a combined statement

Answer 17

true

Question 18

U.S. Securities and Exchange Commission (SEC) regulations for the financial statement presentation and disclosure requirements of SEC filings can be found in:

Answer 18

Regulation S-X.prescribes the form, content, and presentation of and disclosure requirements for financial statements.

Question 19

For the purpose of determining that no additional segments should be reported, the total of external revenues of all reportable segments must make up at least what percentage of total consolidated revenues?

Answer 19

75%

Question 20

When investments are donated and the principal of those funds cannot be expended, those investments are permanently restricted.

Answer 20

herefore, Alpha must record an increase in its permanently restricted net assets.