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FAR Exam > II. Select Financial Statements > Flashcards

II. Select Financial Statements Flashcards

1
Q

How is investment property treated under IFRS?

A

Under IFRS, investment property is defined as property held to earn rentals, for capital appreciation, or both. To qualify, it must NOT be used in the production or supply of goods or services or for administrative purposes, not can it be held for sale in the ordinary course of business.

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2
Q

How should a note (payable or receivable) that has a life longer than one year be recorded?

A

It should be recorded at its present value.

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3
Q

When reconciling bank statement to company books, which account(s) should be adjusted?

Bank Service charge; insufficient funds check; checks outstanding; deposits in transit; bank errors; company book errors

A

Checks outstanding and deposit in transit.

Bank service charge and insufficient funds are already reflected in the bank balance.
Errors on the company books do not need to be included either.

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4
Q

What are inventoriable costs?

A

All costs necessary to prepare goods for sale.

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5
Q

What are some common merchandising costs?

A

Purchase price of the goods, freight-in, handling, insurance, warehousing, and any costs necessary to get the goods to the point of sale.

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6
Q

How are inventories valued under IFRS

A

Valued at lower of cost or net realizable value.

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7
Q

What is working capital?

A

Working Capital = Current Assets - Current Liabilities

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8
Q

What is the recoverable amount under IFRS?

A

The greater of fair value less cost to sell or value in use.

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9
Q

How should interest cost of debt used to finance the construction of fixes assets be treated?

A

It should be capitalized, not expensed.

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10
Q

Under IFRS, when an entity chooses the revaluation model for measuring PP&E, does the revaluation apply to individual assets or the entire asset class which it belongs to?

A

Entire asset class.

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11
Q

What does COPAS stand for?

A 
Contract
Obligations (performance)
Price
Allocation
Satisfaction
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12
Q

What is Level 1 of the Fair Value Heirarchy?

A

Top Level: Price quotes or market price (NYSE or NASDAQ)

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13
Q

What is Level 2 of the Fair Value Heirarchy?

A

Mid Level: Interest Rates (Prime Rate)

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14
Q

What is Level 3 of the Fair Value Heirarchy?

A

Lowest Level: Unobservable Inputs; Uses assumptions or forecasts.

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15
Q

What is FOB Destination?

A

Customer controls item once it is received on their loading dock.

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16
Q

What is FOB Shipping Point?

A

Customer controls item before it is shipped.

17
Q

Where does the financing component appear on the financial statements for the presentation of significant financing components?

A

Interest income/expense is separately presented on Statement of Comprehensive Income.

18
Q

What contract modification occurs when New (Distinct Goods/Services Added and Consideration (amount of payment) Increases?

A

Create New Contract

19
Q

What contract modification occurs when New (Distinct) Goods/Services Added and No Consideration (amount of payment) Increase?

A

Replace Contract

20
Q

What contract modification occurs when New (not distinct) goods/services added?

A

Use the same contract

21
Q

What are the two options for reporting unusual or infrequent items?

A

Two options are: Income statement (above income from continuing operations) or Footnotes to Financial Statements

22
Q

How do you convert revenue from cash basis to accrual basis?

A

SPEAR-BAR

Sales + Ending Accounts Receivable - Beginning Accounts Receivable = Revenue in accrual basis

23
Q

How do you convert COGS from cash basis to accrual basis?

A

CRAP-I

Cash Remitted + increase in Accounts Payable - increase in Inventory = COGS Accrual Basis

24
Q

What is working capital?

A

Working Capital = Current Assets - Current Liabilities

25
Q

What is the current ratio?

A

Current assets / current liabilities

26
Q

What is the quick ratio?

A

Quick ratio = (Cash + A/R + Trading Securities) / Current Liabilities

27
Q

What is A/R turnover?

A

A/R Turnover = credit sales / average A/R

28
Q

What is inventory turnover?

A

Inventory Turnover = COGS / Average Inventory

29
Q

What is Day Sales in Inventory?

A

Days sales in inventory = 365 / Inventory Turnover

30
Q

What is days to collect A/R?

A

Days to Collect A/R = Average A/R / Average Sales per Day

31
Q

How do you treat gain contingencies?

A

You do not accrue gain contingencies due to conservatism.

FAR Exam (10 decks)

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