Mnemonics Flashcards
How to do calculate Pension Expense? Pg, 14-3
How do you calculate each component?
A-SPIDER +++++– (this is only the elements) => you need to know the order
A +/- Amortization of Existing Net Obligation or Net Asset at implementation
S + Service Cost
P +/- Prior Service Cost Amortization (cal: beg PSC/avg service life) => service this year/service in the future
I + Interest Cost (cal: beg PBO x discount rate)
D + Deferred Gain (unrecognized pension gain/ - loss)
(cal: return on Plan Asset - beg PA x expected rate of return)
E - Excess amortization of deferred gain/ + loss; pick bigger of PBO and FV plan asset; multiply by discount; subtract by unamortized; divide by service life
R - ACTUAL Return on PLAN assets (cal: end PA - beg PA - contributions + benefits paid) => EXPECTED return on plan assets (cal: beg PA x expected rate of return)
What are the 3 broad categories of funds? Pg. 30-11
Name the types of funds within each broad category
Pg. 30-13
1) Governmental Funds: similar to GASB chart Pg. 30-1;
utilizes MODIFIED ACCRUAL; expenditures
*PD-Consents-to-Smoking Grass Pg. 30-13
P Permanent: Set aside and cannot be spent => must be
invested in a permanent basis
D Debt Service: Services bonds (principle and interest)
C Capital Projects: Construction
S Special Revenue: Earmarked sources (ie maintains
bridge from tolls) => use of funds are restricted (only
to paint/maintain bridge)
G General: Junk drawer
*I-PIPE-Alot
2) Proprietary Funds similar to FASB chart Pg. 30-1; utilized
ACCRUAL; expenditures; like private business
a) Internal Sevice: for insiders of govt; no user fee
b) Enterprise: for outsiders / insiders of govt; user fee
(ie for public pools there are user fees)
3) Fiduciary Funds: like non-profit; ACCRUAL
a) Pension trust: for govt employees
b) Investment trust: pool govt money and invest
c) Private purpose trust: tabacco tax => use for cancer
research
d) Agency: IRS; collect money and give to someone else;
no fund balance
For government what is the main objectives for the financial reports?
Pg. 30-27
ACE F/S
A Actual VS Budgeted
C Compliance with finance-realated laws, rules, and regulations
E Efficiency and effectiveness
F/S Financial condition and results of operations
What is the statement of operations / activities for a hospital? State the function of each component?
Pg. 32-11
*Where is charity CARE recorded? Pg. NFP #74 WB
PP-NO-ONE
P Patient service revenue (all costs of taking care: hotel type, medical, lab)
P - Provision for contractual adjustments (no bad debt included; allowance included; medicare, employee discounts, not charity)
N = Net patient service revenues
O + Other Operating revenues gains and losses (earned, not patient service, RESTRICTED donations, net assets released from restriction, and interest/dividends) => revenues and gains that represent amounts received for reasons other than performance of health care related service; EARNED
O - Operating Expenses (cost of running hospital); includes bad debt
N + Non-operating revenues (UNEARNED); UNRESTRICTED donations
E = Excess of Rev/Exp
*Charity care is recorded in the notes and NOT in the statement of activities Pg. 32-11
What are the Primary Qualitative characteristics that makes the financial statements USEFUL? Pg. 2-1
Roger is PC (politically correct) but is Materialistic
1) Relevance - capable of making a difference in user’s decision
a) P Predictive value - helps predict or forcast results
b) C Confirmatory value - confirm or correct predictions
FENCE
2) F Faithful representation - info depicts what it represents
a) E Free from ERROR
b) N Neutrality
c) C Completeness
What are the Enhancing Qualitative characteristics that makes the financial statements USEFUL? Pg. 2-1
Roger is CUT like a V C Comparability U Understandability T Timeliness V Verifiability
**It enhances Relevance and Faithful representation (relates to BOTH)
What to remember for PP&E IFRS? Pg. 8-19 (2)
Describe the revaluation model
a) Cost model
b) Revaluation model: when you write up / down, and above cost goes to OCI [DENT-R]; when you write up / down, and below cost goest to I/S
What does a financial instrument include? Pg. 6-1
*What is its significance?
COD
C Cash
O Ownership interest in an entity (stock)
D Derivative contracts that create a right and obligation to transfer other financial instruments (stock options)
*If its not a financial instrument, then its not a derivative
Definition of Derivatives Pg. 6-1
*Derivatives do not include?
SUN: has to be a FINANCIAL INSTRUMENT
S Settlement in cash or equiv (net settlement)
U Underlying (variable) and Notional amount (number of units)
N No net investment
- Underlying is APPLIED to notional (what will be paid)
- Has to be changing, not for a fixed price => derives value from something else
*LAND, certificate of deposit (CDs)
What are the characteristics of a Capital Lease for a lessee? Pg. 11-3
TT-BPO-75-90
Risk of ownership passes to lessee by:Title,Bargain Purchase Option (BPO),Substance - Lease is more than 75% of asset’s useful life or PV of minimum lease payments are more than 90% of fair value
What is the trick for admitting a new partner for the bonus method and the goodwill method? Pg. 16-2
GAL: Goodwill adjust left, by using number on right
BAR: Bonus adjust right, by using number on left
How do you approach a deferred tax problem? Pg. 19-16
Think of the journal entry for deferred taxes
Income tax expense: debit
Current tax liability: credit
Deferred tax liability
Definitions for Liabilities: Pg. 12-2
a) Accrued Liabilities / Expenses
b) Prepaid Expenses
c) Deferred Revenues
d) Revenue Receivable
a) An expense that is incurred but not yet paid in cash
b) Expenses paid in cash, but not yet incurred
c) Revenue collected, but not yet earned
d) Revenue earned, but not yet collected
Definitions for 5 fund balance classifications Pg. 30-13
a) Non spendable fund balance
b) Restricted fund balance
c) Commited fund balance
d) Assigned fund balance
e) Unassigned fund balance
a) Fund that cannot be spent due to legal or contractual restrictions or are not in spendable form
b) Funds that are either externally restricted for a specific purpose or restricted by law => lein
c) Funds committed for a specific purpose by formal government action
d) Neither restricted nor committed, but are constrained by the governments INTENT to be used for a specific purpose
e) Represents the general fund’s balance that is not restricted, committed or assigned to a specific purpose
What is the absolute minimum number of funds for government accounting?
One, the general fund
For declaring a stock dividend, what must you remember about it? Pg. 15-12
If its small stock use FMV
If its a big stock use PAR
For intagibles, what is the proper treatment of the cost of equipment used in R&D activities that will have alternative future uses? 2013 AICPA #46
Capitalized and depreciated over its estimated useful life
For bonds how do you determine interest expense VS interest paid? 2013 AICPA TBS
Interest expense: when it is issued or how often interest is paid (annually, semi annually) => when using bond interest table; dont use when trying to find bond proceeds
Interest paid: what month was interest paid
Name the appropriate valuation technique to measure fair value Pg. 2-5
MIC
M Market Approach: uses prices and relevant information from market transactions for identical of comparable assets/liabilities
I Income approach: uses present value techniq earnings
C Cost approach: uses current replacement cost
What is included in other comprehensive income? Pg. 2-3
DENT
DENT-R for IFRS
D Derivative cash flow hedges
E Excess adj of Pension PBO and FV of plan assets at year end
N Net unrealized gains or losses on “AFS”
T Translation adj for foreign currency
R Revalutation gains; losses go to income statement
Bank Reconciliation Calculations Pg. 3-2
a) Balance on bank statement
b) Checkbook Balance
+ Deposits in transit
- Outstanding checks
+/- Errors made by bank
= Corrected balance
+ Amounts collected by bank
- Unrecorded bank charges
+/- Errors made in recoreding transactions
= Corrected balance
Does maintenance of goodwill count in the calculation of goodwill? Intagibles #7
No it doesnt count; Goodwill is only determined from the initial purchase
