Miscellaneous

Question 1

What is the formula for the times Interest earned ratio

Answer 1

(Income before interest expenses and taxes)/interest expense

Question 2

How is insurance expense calculated in a year for a life insurance policy

Answer 2

Premium - increase in asset (surrender value)

Question 3

An increase in the cash surrender value of a life insurance policy owned by a company would be recorded by

Answer 3

Decreasing annual insurance expense

Question 4

Define a special item in regards to governmental reporting

Answer 4

An occurrence that is both unusual and infrequent, that results from management action

Question 5

What is the formula for basic earnings per share

Answer 5

(Net Income - PS/Dividend)/weighted average stock outstanding

Question 6

Where in it’s financial statements should a company disclose information about it’s concentration of credit risks

Answer 6

Notes to financial statements

Question 7

Formula for Inventory Turnover

Answer 7

COGS/average Inventory

COGS=BI + Net purchases - Ei

Average inventory = (BI + EI)/2

Question 8

Formula for Quick/Acid Test Ratio

Answer 8

Quick Assets - (Pre-Paids and Inventory)/Current Liabilities

Quick Assets include Cash, Net AR, and marketbale equity securities

Question 9

Formula for AR turnover in days

Answer 9

AR Turnover = Net Credit Sales/ Average Recievables

Turnover in days=365/AR Turnover

Question 10

Formula for day sales in inventory

Answer 10

Average Inventory/COGS * Working days per year

Question 11

Average Collection Period for Accounts Receivable

Answer 11

AR Turnover/360

AR Turnover = Net Credit Sales/Average AR

Question 12

What is the formula for the defense interval ratio

Answer 12

Quick Assets/ Average Daily Cash expenditures

Question 13

Define Restricted in regards to government accounting

Answer 13

Constrained by either externally imposed conditions such as from creditors or grantors, or by legislation. The council’s actions do not constitute external constraints or enabling legislation

Question 14

Intrinsic Value formula for options

Answer 14

Market price - exercise price

Question 15

When is revenue recognized under a long-term construction contract using the completed contract method

Answer 15

Deferred until contract is complete

Question 16

What steps are necessary for the SEC to make a rule

Answer 16

Concept Release
Rule Proposal
Rule Adoption

Question 17

In a capital lease what does the gross lease receivables account represent.

Answer 17

The entire lease payments to be received by the lessor in an undiscounted fashion plus residual value

Question 18

Managements Discussion and analysis is classified as

Answer 18

Required Supplementary Information

Question 19

In governmental accounting an object refers to

Answer 19

“The type(S) of items purchased or services obtained” i.e. “What” is acquired

Question 20

What items are not eligible for the fair value election

Answer 20

An investment in a subsidiary that the entity is required to consolidate

An interest in a variable interest entity that the entity is required to consolidate

Employers and plan’s obligations (or assets representing net overfunded positions) for pension benefits, other post retirement benefits (including health care and life insurance benefits) post employment benefits, employee stock option and purchase plans, and other forms of deferred compensation arrangements

Financial assets and financial liabilities recognized under leases

Deposit liabilities, withdrawable on demand, of banks, savings and loan associations, credit unions, and other similar depository institutions .

Financial instruments that are in Whole or in part, classified by the issuer as a component of shareholders equity (including “temporary equity”). Ex convertible debt security with a non contingent beneficial conversion feature

Question 21

The 4 criteria that a lease must hit one of to be a capital lease include

Answer 21

TT: Title Transfer
BPO: Bargain Purchase Option
75: 75% or more of economic life of asset
90: pv of lease payments is 90% or more of fair value of leased assets

Question 22

When a lease is a capital lease, at what amount does the lessee recognize a lease obligation

Answer 22

Pv of the minimum lease payments

Question 23

Recognition criteria of all eligibility requirements are met is characteristic of(govt)

Fund level statements
Entity wide statements

Answer 23

Both

Question 24

Explain the lower of cost or market inventory valuation in respect to IFRS application

Answer 24

Lower of cost or net realizable value

Question 25

Cash outflows from financing activities include

Answer 25

Cash payments for dividends and principal payments to creditors

Question 26

Disclosure is required by public ally held companies if 10% or more of total revenues are derived from

Answer 26

Both sales to single customer and export sales

Question 27

What are the accumulated benefit obligation and the projected benefit obligation based on

Answer 27

Accumulated-prior compensation

Projected- future compensation

Question 28

Formula for end of year projected benefit obligation

Answer 28

Begin bal + service cost + int cost - benefits paid

Question 29

Formula for pension expense

Answer 29

Service cost - expected rate of return on plan assets, +amortization of prior service costs + interest cost on pension obligation

Question 30

Software production costs are capitalized and reported at the lower of…

Answer 30

Unamortized cost or net realizable value (nrv)