RANDOM QUIZ #1 Flashcards

1
Q

In GASB 34 (Basic Financial Statements-and Management’s Discussion and Analysis-for State and Local Governments), certain budgetary schedules are required supplementary information. What is the minimum budgetary information required to be reported in those schedules?

A

In Required Supplementary Information (RSI) for Govt-wide statements GASB 34 requires:

  1. Original budget,
  2. Appropriations Budget,
  3. Actual Inflows, Outflows, and Balances on a budgetary basis
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2
Q

Trading Security converted to AFS -

Cost is 650
MV when purchased 575
MV when reclassified as AFS 530
MV at end of year (post reclassification) 490

How much loss s/b reported in the yearly I/S?

A

Answer is 45,000

Investment’s CV as a Trading Sec. was MV (575)
Had to reduce CV to 530 MV when reclassified (45k loss)

Loss of 40k after reclassification not incl. in I/S - it would be an unrealized loss in OCI and goes to B/S.

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3
Q

A bond issuer incurs $3,300 bond issue expense when 5-yr debenture BONDS dated 4-1-X1 are issued 8-31-X1. What is the amount of Bond Issue Expense that he should report in his Dec 31, 20X1 income statements?

A

The $3,300 is amortized from when bonds are dated. First, determine monthly amortization based on bond date (4-1 - not issue date) divided by bond term (5 yrs). This gives a monthly amortization which is then multiplied by the months the buyer held the bond that year.

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4
Q

What inventory costing method is best when a company wants to

MINIMIZE NET INCOME in a period of rising prices

A

LIFO is best to MINIMIZE NET INCOME during inflation
(Lowest ending Inventory; Highest COGs)

FIFO will maximize Net Income
(Highest ending Inventory; Lowest COGS)
Weighted Ave
Moving Ave – both of these will fall between

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5
Q

Which cash flow method must an enterprise fund use to report cash flow operating activities in the statement of cash flows

A

GASB requires proprietary funds (Enterprise and Internal Service) to use the Direct Method on cash flow statments in keeping with concepts of transparancy and accountability

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6
Q

How do you calculate Unrecognized prior service cost amortization?

A

svc yrs in curr yr / Total # svc yrs in future

               x unrecognized PSC
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7
Q

Calculate the length of the operating cycle given # days sales in inventory and # days sales in trade receivables

A

Days in Operating Cylce =

Ave # days sales in Inventory +
Ave # days sales in Receivables

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8
Q

The entry to record the write off of a specific uncollectible account – what is the impact on a/r, net income and working capital?

A

Affects neither net income or working capital

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9
Q

Installment method carried out in 24 payments at 12%. What is the balance of the note receivable after 6 payments are made?

A

Note Receivable value = PV of remaining future payments discounted at 12%.

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10
Q

List the 3 appropriate methods for recognizing expenses.

A

Cause and effect
Systematic and rationale
Immediate Recognition

PNM: CSI (Crime show)

(Note: Deferral and Amortization is not a method of expense recognition.)

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11
Q

Calculate capital liability after first year of capital lease.

A

pv of all future min lease payments less any payments already made.

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12
Q

When FV of appraised assets exceeds purchase price in a business combination, how is the excess reported?

A

Difference is recognized as a GAIN in the PERIOD OF ACQUISITION. The acquisition is seen as a bargain purchase

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13
Q

In determining if segment is a reportable segment, which element is NOT a consideration

a) Intersegment sales of products
b) Interest earned from loans to other segments
c) Sales to unaffiliated customers

A

Interest earned from loans to other segments

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14
Q

Which method produces the highest COGS and the lowest ending Inventory valuation?

A

LIFO results in lowest inventory valuation (highest COGS), but if IFRS and not allowed, specific identification is the next best.

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15
Q

What method will result in an asset with a 15% salvage value having a balance at the end of its useful life that is equal to its original cost

A

Neither straight line or DDB because SL will end up depreciating down to the salvage value; ddb will have to change to sum of yrs digits or straight line and also will end up at salvage value.

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16
Q

How do you calculate COGS on a current cost basis?

A

Multiply Number of Units Sold by average Current Cost of Units during the year

17
Q

What are the 4 requirements for recognizing revenue under IFRS?

A

ARE PEBbles SCattered in CInCinaTi?

1) AMOUNT of REVENUE c/b msrd reliably
2) PROBABLE ECONOMIC BENEFITS will flow to entity
3) STAGE of COMPLETION c/b msrd reliably at end of rptg period
4) COSTS INCURRED to COMPLETE TRANSACTION c/b msrd reliably.

18
Q

Where do you report the difference between the pension balance and amounts contributed?
Hint: Diff betw PBO & FV of plan assets at year end.

A
Accumulated OCI on B/S
D
E = Excess adj. of PBO and FV or plan assets at year end.
N
T
19
Q

Govt wide financial stmts use what method of measurement focus and basis of accounting?

A

Msrmt Meth:Economic Resource

Basis of Acct: Accrual

20
Q

How do you value the basis of stocks that are bequeathed to a relative?

A

Stocks are bequeathed or gifted, basis is recorded at FV when transferred

21
Q

What type of organization must prepare a stmt of functional expense?

A

Voluntary Health and Welfare Organization (like a homeless shelter)

22
Q

What is DEFERRED REVENUE?

A

Revenue that has been received BEFORE IT IS EARNED. It represents a LIABILITY on the books until the work is performed.

23
Q

Business imports and exports products for sale. How much in shipping costs will be included (what type of costs will be incl in inventory, and what type will be expensed?)

A

shipping costs from overseas FOR IMPORTS are included in end of year inventory
Shipping costs for exports are expensed as cost of sales in period incurred