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FAR Test 2 > Leases, Gov, Basic Concepts, BCC > Flashcards

Leases, Gov, Basic Concepts, BCC Flashcards

1
Q

Primary Characteristics

A

Faithful Representation, Relevance

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2
Q

Components of Faithful Representation

A

Free from error, complete, neutral

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3
Q

Components or Relevance

A

Material, predictive value, confirmatory value

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4
Q

Enhancing characteristics

A

Comparable, timely, understandable, verifiable

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5
Q

Four Assumptions

A

(Entirely from your GUT)

Entity, Going concern, unit of measure, time period

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6
Q

When AR decreases (cash to accrual)

A

Cash received was higher than accrual sales

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7
Q

When AP increases (cash to accrual)

A

Cash received was higher than accrual sales

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8
Q

Collection of Note receivable is what type of cash flow

A

Investing

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9
Q

Collection of Note Payable is what type of cash flow

A

Financing

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10
Q

Ending AR Equation

A

Beg AR+Sales-collections(or cash sales)-write offs

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11
Q

Days to File 10Q
Large Acc filer (700mill)
Non Acc filer

A

Large=40 days Non Acc= 45 days

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12
Q

Highest and best of a non financial asset can be determined how?

A

Through use or exchange

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13
Q

Blockage Factor and quoted Market prices

A

Do not affect FV

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14
Q

Main SEC pronouncments

A

Fin Rep Releases (FRR)

Staff Acct bull (SAB)

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15
Q

ASC 820 does not apply to what?

A

Inventory

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16
Q

Approach to determine FV based on replacement

A

Cost

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17
Q

Retained earnings equation

A

Rev-exp -tax=NI+old RE

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18
Q

Payment of Dividends cash flow activity

A

Financing

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19
Q

Unamortized bond disc cash flow activity

A

Operating

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20
Q

Defense Interval Ratio

A

QA/Daily EXP

Liquidity

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21
Q

Asset Turnover

A

Sales/ Avg total A

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22
Q

AR Turnover

A

Net Credit Sales/ Avg Net AP

O

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23
Q

Notes Payable Measurement

A

Not at cash expected to be received

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24
Q

Inventory and PPD Asset Classification

A

NOT liquid

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25
Q

Quick Ratio

A 
Liquid CA (market sec, cash, ar net) / CL
(L)
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26
Q

Debt to Equity

A

Total Debt/ OE

L

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27
Q

Working Capital

A

CA - CL

L

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28
Q

Working Capital Ratio

A

CA/CL

L

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29
Q

Acid Test Ratio

quick Ratio

A

Cash+net rec+mark sec/ CL

L

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30
Q

Securities Defense Interval Ratio

A

Cash+net rec+mark sec/ Avg daily cash exp

L

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31
Q

Times interest Earned

A

Net inc+Int exp+tax/ Int exp

L

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32
Q

Times Pref Dividend Earned

A

NI / Annual Pref Dividend obligation

L

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33
Q

days in avg rec

A

Days in yr/ AR TO

O

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34
Q

Inventory Turnover

A

COGS / Avg Inv

O

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35
Q

days supply in inv

A

Days in yr/ Inv TO

O

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36
Q

Days in operating

A 
# days sales in AR+#days supply in inv
(O)
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37
Q

Debt to equity

A

Debt(liab) / OE

P

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38
Q

Profit Margin

A

NI / Net Sales

P

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39
Q

Return on total A

A

NI + Int exp / avg total A

P

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40
Q

Return on cs equity

A

NI-pref div(only whats pd) / avg cs equity

P

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41
Q

Return on OE

A

NI / Avg stock equity

P

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42
Q

EPS

A

NI- pref div pd / weighted avg # shares out

P

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43
Q

Price Earned

A

MP common share / EPS

P

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44
Q

Total Basis

A

Cash div to cs / ni to common share

P

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45
Q

Per share basis

A

Cash div per cs share / earn per cs

P

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46
Q

Common Stock yeild

A

Div per cs / MP per cs

P

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47
Q

Debt to equity

A

total Liab / total share equity

E/I

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48
Q

Owners Equity

A

Share holders equity/ TA

E/I

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49
Q

Debt Ratio

A

Total L/ Total A

E/I

50
Q

BV per CS

A

Common share equity / # cs out

E/I

51
Q

BV per PS

A

Pref share equity / # of PS out

E/I

52
Q

Deferred Means

A

Cash Before

53
Q

Accrual Means

A

Cash After

54
Q

Convert Accrual to Cash

A

^Liab+^Equity-^other assets(acc exp)

55
Q

Convert Cash to Accrual

A

^other assets-^liab-^other assets

56
Q

PPE and Intangibles are on BS at

A

Historical Cost or depreciated amortized cost

57
Q

Receivables are on BS at

A

NRV

58
Q

Inventory are on BS at

A

Lower of Cost or Market

59
Q

Invest in Mark sec are on BS at

A

MV

60
Q

Liabilities are on BS at

A

PV

61
Q

Owners Equity is on BS at

A

Historical value of inflows and residual value

62
Q

Entry for Discount on Bonds Payable

A

DR: Int exp
CR: Disc BP

63
Q

Balance for Bond Payble account

A

Credit Disc on BP is a debit balance which reduces the CV of the bonds so when so when you amort you CR Disc to increase the value of the bonds

64
Q

Treatment of Error correction

A

recognized as an adj to opening balance on the RE stmt includes changes in policy that are going from not GAAP to GAAP

65
Q

Effective Interest Method

Int Exp =

A

CA bond x yeild rate x time pd

66
Q

Effective Interest Method

Cash Int pd=

A

FV Bond x stated rate x time pd

67
Q

Bond Premium

A

Diff between int payable and expense

68
Q

Unamortized bond premium

A

FV bond - CA bond - premium

69
Q

What must a development stage company present

A

IS and stmt of Cash flow with cumulative amounts

70
Q

Pension obligation adjustment

A

If obligation exceeds assets then do following

Proj Obligation-FV A-PensionA/L= adjustment Needed

71
Q

Accounting Principles (5)

A

Measure at HC, Measure at other, rev recog, exp recog, full disclosure

72
Q

NRV uses

A

app liquidation, or SP after costs deducted (lower cost or market Inventory)

73
Q

Current replacement Cost

A

Cost to replace asset

74
Q

FV

A

also CMV price received to sell an asset in an orderly transaction

75
Q

Amort Cost

A

HC - acc Dep

76
Q

NPV

A

Discounting the expected future cash flows ( used for cap budgeting)

77
Q

Marketable securities are valued at?

A

CMV

78
Q

Change in Estimate treatment

A

recognized in pd of change and future

79
Q

Interim tax expense is calculated YTD Ex:

A

SO Q2:

(total inc x T rate) - Q1 reported tax= Q2 interim tax

80
Q

Gov Availb funds =

A

Approp- Encumbrances - expenditures

81
Q

Consolidated RE

A

only parent co dividends are reported

82
Q

10Q
10K
S-1
8K Information

A

10q is quarterly filed to SEC
10k is annual
S-1 is initial securities registration
8k is information report filed anytime of year

83
Q

What happens JE wise when dividends are declared

A

RE goes down
DR:RE CR: Div Pay when declared
DR: Div Pay CR: cash when paid

84
Q

JE for amort on Bond Premium

A

DR: Prem on BP
CR: Int Exp
This reduces CV and int exp thus increases NI

85
Q

Personal Assets recognized at

A

Estimated CV

86
Q

Non for profits provide the following Stmts

A

stmt fin position, stmt of activities, stmt of cash flows

87
Q

FV

A

Price received when selling an asset or paid when transferring an liab

88
Q

COGS

A

BI+purch-EI
also
Percentage: NS - GP if Gp rate is 30 then cogs rate must be 70 Ex: NS$(70)=Cogs$

89
Q

Functional Curreny

A

Currency of primary market of entity

90
Q

Presentation Currency

A

That which Fin stmts are presented in

91
Q

Encumbrances

A

commitments related to unperformed contracts for goods or services

92
Q

Entry when Gov records Budget and uses appropriations

A

Apps show max spending authority
DR: Est rev
CR: approps
CR: budgetary fund balance

93
Q

Major customer must be disclosed when

A

10% of sales or more go to that 1 person

94
Q

Capital Lease Cost basis of an asset is?

A

PV of min pmts discounted at appropriate rate. Lessee records by…
DR: Asset
CR: Liab

95
Q

BS affect of Cash dividends pd

A

shows no change in RE and a decrease in minority interest

96
Q

Push down accounting

A

IFRS does not all SEC does

97
Q

Value of Asset purchased with stock

A

Record at amount of stock disbursed

Shares x MV

98
Q

Finders Fees and Registration/Issue Fees

A

Finders are just expensed when determining add pd in cap and reg/issue are taken out of add paid in cap

99
Q

Consolidated Equity

A

Same as parents before purchase

100
Q

Treatment of equity investments

A

20% owned=FV or Amort
20-50% = Equity or FV
51-100% Consolidated or Equity

101
Q

GP % =

A

GP/Installment Sales

102
Q

Deferred GP =

A

GP% x end of yr Rec

Add yrs together multiplied by their own %’s

103
Q

Cash to Acc for Operating Exp

A
  • increase in PPD + increase in Liab
104
Q

Cash pd to suppliers

A

cogs - decrease in inv + decrease in Ap

105
Q

What is depletion

A

allocation and amortization

106
Q

To determine cash pd for an Expense =

A

Exp amt + beg payable - end Payable - beg PPD + end PPD = Total cash paid

107
Q

Royalties are recognized?

A

As revenue when they are earned

108
Q

Most conservative income method

A

Cost Recovery

109
Q

Cogs with purch as given

A

Cash pd + increase in AP + decrease in Inv

110
Q

Installment Sales recog

A

GP deferred until cash is collected and the apply GP rate to cash collections and that is INc

111
Q

LIFO, contract method, extraordinary items

A

Not allowed by IFRS

112
Q

When change from cash to accrual report how?

A

as prior pd adj net of tax by adjusting beg bal of RE

113
Q

To find out what is over or understated (tower)

A 
BI+
Purch=
GAS-
EI=
COGS    Flows into NI and then RE
114
Q

accounting change in estimate

A

in pd and future

115
Q

Accounting error

A

requires prior pd adj

116
Q

Dismantle exp at end

A

recognize over life of asset

117
Q

Principle vs Est change

A

assume estimate change

change in method = change in principal

118
Q

Sum of yrs Digits =

A

Years remaining to amort / Year OG(year OG+1)/2

119
Q

Change in accounting Method

A

as prior pd adj net of tax by adjusting beg bal of RE

120
Q

Change in accounting principal

A

Restate prior stmts

FAR Test 2 (1 decks)

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