Income Statement Items Flashcards
WHAT method(s) can be used to estimate the standalone selling price of a performance obligation in a contract with customers (when the price is not directly observable)?
(a) The adjustment market assessment
(b) Expected Cost Plus an Appropriate Margin
i. e. These are acceptable estimates of the standalone selling price of a performance obligation when that price is not directly observable.
What would be considered “potential common stock?”
Potential common stocks include:
Options, Warrants, Convertible preferred stock, Convertible debt, and Contingent stock agreements.
WHAT document is considered a typical part of the due-process activities of the Financial Accounting Standards Board (FASB) for amending the FASB codification?
A Proposed Accounting Standards Update
i.e. This update describes amendments to the Accounting Standards Codification
WHAT is a valuation account?
AN account that increases or decreases the carrying amount of an asset
Note - This is related to assets but is not in itself an Asset or a Liability
WHO established the Financial Accounting Standards Board (FASB)?
THE Financial Accounting Foundation (FAF)
i.e. THEY have oversight responsibility over the FASB
According to FASB Conceptual Framework, how may an entity’s revenue be created?
By the increase in an Asset; OR
A decrease in a Liability from primary operations
i.e. This will result in revenue creation
WHAT are considered the “basic elements” of financial reporting?
(1) Assets
(2) Liabilities
(3) Equity or Net Assets
WHAT are considered the elements of comprehensive income?
(1) Revenues
(2) Expenses
(3) Gains or Losses
WHERE in the Financial Statements should a company disclose information about a concentration of credit risks?
In the Notes to the Financial Statements
Note - Credit Risks are risks of Multiple or Large defaults that are affected by the same or common issue
How does the Physical Capital maintenance concept work?
Gains and losses are recognized only when assets are disposed of or liabilities are settled
i.e. This approach is generally used to calculate net income
How does the Financial Capital maintenance concept work?
IT increases or decreases both when assets are disposed of or liabilities are settled;
- and when assets or liabilities change in value (resulting in holding gains or losses)
Note - These items are excluded from net income but included in other comprehensive income
WHAT is a distinct difference between Managerial and Financial Accounting?
Managerial Accounting does NOT need to follow GAAP but Financial Accounting does
WHAT is included in Comprehensive Income under the FASB Conceptual Framework?
ALL changes to equity other than;
- Owner-Related Items
e. g. Stockholders’ Equity, Contributions from Owners, and Distributions to Owners would NOT be included as they are considered “ Owner-Related Items”
WHAT is it called when a buyer has a right to return goods it is unable to sell?
A sale with a “right of return”
WHAT is the monetary unit assumption?
MONEY is a common denominator of economic activity; and
- IT provides an appropriate basis for accounting measurement and analysis
