frameworks notes Flashcards
3 main aspects of financial reporting that GAAP addresses
- recognition
- measurement
- disclosure
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
FASB
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
bank reconciliation
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
allowance method.
what is included in the inventory
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.
gross margin method
sales-cost=margin
retail inventory method
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.
inventory equation
- beg inventoy
add: purchase
equals: goods available for sale
less: ending inventory
equals: COGS
valuation of capital assest: what are the general rules
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.
the funded status of a defined benefit pension plan for a company should be reported in?
the stmt of financial position
under IFRS, which measurements is allowed to estimate and report the liability for the cost of settling a lawsuit
best estimate to settle and discount amounts of estimated loss to present value.
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?
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.
Predict and confirm your material value once you pass
fundamental qualitative characteristics: relevance: capable of making a difference.
completely neutral is free from error
fundamental qualitative characteristics: faithful representation: represent the reported economic phenomena
compare and verify in time to understand
enhancing qualitative characteristics.
segment reporting
when a customer constitute more than 10% of the total enterprise revenue, you are required to disclose your reliance on them.
both US GAAP and IFRS allow a separate statement of comprehensive income or a combined statement
true
U.S. Securities and Exchange Commission (SEC) regulations for the financial statement presentation and disclosure requirements of SEC filings can be found in:
Regulation S-X.prescribes the form, content, and presentation of and disclosure requirements for financial statements.
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?
75%
When investments are donated and the principal of those funds cannot be expended, those investments are permanently restricted.
herefore, Alpha must record an increase in its permanently restricted net assets.
