Quiz Day 2 Wrong Answers Flashcards
When is a nonprofit allowed to use “operating profit” and segregate its recurring items from its nonrecurring items in its statement of activities?
The organization reports the change in unrestricted net assets
For the period
Are losses from discontinued operations, accrued starting from the beginning of the year of when operations are discontinued or after the board of directors votes to discontinue operations?
Beginning of the year
If an operating segment’s revenue (sales to unaffiliated customers and inter segment sales) is 10% or more of the combined revenue…
It is a reportable segment
For a security transferred from the trading category, the unrealized holding gain or loss at the date of the transfer will…
Have already been recognized in earnings and shall not be reversed
For a security transferred into the trading category, the unrealized holding gain or loss at the date of the transfer will…
Be recognized in earnings immediately
If a $20,000 rental payment is received on June 15th for a July 1st 1 year lease, when the current year’s tax rate is 28% and the next year’s tax rate is 30%, what is the amount of the deferred tax asset? (2 step calculation)
Rental payment - BV of rental payment. = temporary difference
$20,000 - (6/12 x $20,000). = $10,000
Temporary difference x applicable tax rate = deferred tax asset
$10,000 x 30%. = $3,000
If a company fails to record a depreciation expense of $10,000 from an asset being depreciated on a straight line basis in the previous year. What is the depreciation expense in the current year’s financial statements?
$10,000, the correction of an error in year 1 would not affect the amount of depreciation expense for year 2
Voluntary changes in accounting principle should be recognized using…
The retrospective approach
Retrospective approach, where cumulative effect is reported as an adjustment of the beginning of year retained earnings of the earliest year presented, thus the cumulative effect of a change in accounting principal would…
Not be included in the current year’s financial statement
When the customer pays the annual fee, the related revenue should be recognized…
Evenly over the contract year
Land donated to a city, for the city to build a parking garage should be reported as…
A capital asset in the government wide statement of net position
In governmental activities column
Significant influence vs. Consolidation, should a intercompany receivable be recorded separately under either?
Recorded in the case of significant influence
The gain or loss on the settlement of the ARO liability is the difference between…
ARO liability on settlement date and the actual settlement cost
It is required that the initial liability on the ARO be increased to…
The expected cash flow adjusted for market risk and inflation
IFRS allows an exception of impracticality for…2
1 changes in accounting principles
2 correction of errors
If a collection is not capitalized by a non profit, the existence of the collection can not be disregarded and…
A note describing the collection must be referenced on a line
On the face of the financial statement
GASB 1500.118, requires disclosure of principal and interest requirements to maturity, presented separately for…
Each of the five subsequent fiscal years and in 5-year increments
Thereafter
Criteria that identify operating segments that may be combined in identifying reportable segments do not include…
Overlapping personnel
Operating segments that may be combined in identifying reportable segments, may have 5 following similar characteristics
1 nature of products and services 2 nature of production processes 3 type or class of customer 4 distribution methods 5 nature of regulatory environment
Intercompany dividends and dividends paid to noncontrolling interest shareholders, which are included in consolidated financial statements?
Dividends paid to noncontrolling interest share holders only
When switching from the fair value method for a 10% ownership interest to the equity method for a 40% ownership interest, the 10% ownership interest should…
Get retrospective treatment as if it was under the equity method
If income before taxes is $100,000, but because of a permanent difference taxable income is only $80,000. What is the income tax expense, when the tax rate is 30%?
Because no temporary differences exist, income tax expense
Is the same as income tax payable
income tax expense = Taxable income x 30%
If a company wins a lawsuit and a settlement is offered, but no money has actually been received yet, the gain from the lawsuit is…
A gain contingency because the settlement offer could be revoked
Or rejected or appeal could still occur
If a company wins a lawsuit and a settlement is offered, but no money has actually been received yet, the gain from the lawsuit is reported as…
A disclosure in the notes of the financial statements
On combined financial statements intercompany transactions will…
Not affect combined income
What is the journal entry where treasury shares (previously purchased under the cost method for $480,000) are reissued for $360,000 cash, and paid in capital at original issuance was $100,000?
Cash. 360,000
PiC. 100,000
R/E. 20,000
Treasury shares. 480,000
When ending inventory is lower, how are net income, cost of goods sold, taxes and retained earnings affected?
COGS higher
Net income lower
Taxes lower
Retained earnings lower
Dividend income does not include…
Liquidating dividends
If a change in the provisions of a capital lease gives rise to new agreement classified as an operating lease the transactions shall be accounted for…
Under the sale leaseback requirements
Realized gross profit under the installment sales method does not include…
Interest
Capitalizing the art collection means recognizing it as…
A capital asset in the records
Usual general capital assets are generated by governments making…
Expenditures to build or acquire assets
When a government makes no expenditure of resources to acquire a capital asset neither…
The capital asset nor any expenditures will be recognized in
The governmental funds
If a note is issued on June 30, year 0 and payments of $50,000 plus interest are made on July 1st of the next 3 years, what is the current asset of interest on the note receivable on June 30, year 2?
Interest rate x cv of note July 1st year 1
Bodies corporate and politic and entities with power to enact and enforce tax levy are…
Governments
Not for profit organizations that are not governmental are…
Exempt from federal taxation
The FASB has jurisdiction over entities with which of the following characteristics?
Exempt from federal taxation
Under the par value method, what paid in capital accounts exist?
Only paid in capital in excess of par
When $550,000 of preferred stock is converted, how much common stock and additional paid in capital is created?
$550,000 worth
Under GASB, the minimum requirements for general purpose external financial statements are…4
1 government wide and fund financial statements
2 notes
3 management’s discussion and analysis
4 required supplementary info
Governments should prepare and publish a…
Comprehensive annual financial report (CAFR)
Comprehensive annual financial report (CAFR) includes…
Information additional to basic general purpose financial
statements
When restrictions are met in temporarily restricted net assets, they are shown on the statement of activities as…
2) what does this mean?
Net assets released from restrictions
2) unrestricted net assets increased
The payment of scholarships specified by a donor should be shown as…
Part of unrestricted expenses
The payment of scholarships specified by a donor causes…
An increase and decrease in unrestricted net assets
Data of discretely presented component units should be displayed in the government wide statement of activities and statement of net position in…
In columns to the right or after primary government information
The focus of government wide financial statements should be on…
Primary government information
Separate columns distinguish the primary government and its…
Discretely presented component units
Discretely presented component units are not in substance part of…
Primary government
Blended component units are…
In substance part of primary government
Metro general is a municipally owned and operated hospital and a component unit of Metro City. Where should the information for Metro General be presented in the government wide financial statements?
In component units column after primary government totals
