RANDOM QUIZ #1 Flashcards
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?
In Required Supplementary Information (RSI) for Govt-wide statements GASB 34 requires:
- Original budget,
- Appropriations Budget,
- Actual Inflows, Outflows, and Balances on a budgetary basis
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?
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.
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?
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.
What inventory costing method is best when a company wants to
MINIMIZE NET INCOME in a period of rising prices
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
Which cash flow method must an enterprise fund use to report cash flow operating activities in the statement of cash flows
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
How do you calculate Unrecognized prior service cost amortization?
svc yrs in curr yr / Total # svc yrs in future
x unrecognized PSC
Calculate the length of the operating cycle given # days sales in inventory and # days sales in trade receivables
Days in Operating Cylce =
Ave # days sales in Inventory +
Ave # days sales in Receivables
The entry to record the write off of a specific uncollectible account – what is the impact on a/r, net income and working capital?
Affects neither net income or working capital
Installment method carried out in 24 payments at 12%. What is the balance of the note receivable after 6 payments are made?
Note Receivable value = PV of remaining future payments discounted at 12%.
List the 3 appropriate methods for recognizing expenses.
Cause and effect
Systematic and rationale
Immediate Recognition
PNM: CSI (Crime show)
(Note: Deferral and Amortization is not a method of expense recognition.)
Calculate capital liability after first year of capital lease.
pv of all future min lease payments less any payments already made.
When FV of appraised assets exceeds purchase price in a business combination, how is the excess reported?
Difference is recognized as a GAIN in the PERIOD OF ACQUISITION. The acquisition is seen as a bargain purchase
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
Interest earned from loans to other segments
Which method produces the highest COGS and the lowest ending Inventory valuation?
LIFO results in lowest inventory valuation (highest COGS), but if IFRS and not allowed, specific identification is the next best.
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
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.
How do you calculate COGS on a current cost basis?
Multiply Number of Units Sold by average Current Cost of Units during the year
What are the 4 requirements for recognizing revenue under IFRS?
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.
Where do you report the difference between the pension balance and amounts contributed?
Hint: Diff betw PBO & FV of plan assets at year end.
Accumulated OCI on B/S D E = Excess adj. of PBO and FV or plan assets at year end. N T
Govt wide financial stmts use what method of measurement focus and basis of accounting?
Msrmt Meth:Economic Resource
Basis of Acct: Accrual
How do you value the basis of stocks that are bequeathed to a relative?
Stocks are bequeathed or gifted, basis is recorded at FV when transferred
What type of organization must prepare a stmt of functional expense?
Voluntary Health and Welfare Organization (like a homeless shelter)
What is DEFERRED REVENUE?
Revenue that has been received BEFORE IT IS EARNED. It represents a LIABILITY on the books until the work is performed.
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?)
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