Review of FAR 8-10 Flashcards
What is the basic EPS Formula
Income available to common shareholders / Weighted Average number of common shares outstanding
What instruments could be potentially dilutive and thus affect dilutive EPS
Stock options and warrants
Bonds or preferred stock (convertible stocks)
Contracts that may be settled in cash and stock
Contingent issuable shares
What kind of capital structure is associated with basic EPS, what about for diluted EPS?
Basic EPS: Simple capital structure
Diluted EPS: Complex capital structure
What is the equation for the diluted EPS
Income avail. to common shareholders assuming the conversion of all dillutive securities DIVIDED BY Weighted Average Common Shares Outstanding after the conversion of all dillutive shares
Where is the basic EPS and diluted EPS listed on the financial statements
The face of the income statement
What are the three sections of the statements of cash flows and what components are included within each
Operating activities: Cash flows from income statement transactions and current assets/liabilities
Investing Activities: Cash Flows from non-current assets
Financing Activities: Cash flows from debt and equity
Name the common adjustments made to cash flows from operating activities using the indirect method
CLAD
Current Assets and Liabilities
Losses and gains
Amortization and depreciation
Deferred Items
Identify the basis of accounting for not-for-profit organizations
full accrual basis
What are the three sections of the statement of activities for not-for-profit orgs
Change in total assets
Change in net assets without donor restrictions
change in net assets with donor restrictions
Name the functional classification of expenses commonly used in not for profit orgs
Program expenses: those which are related to the NFP’s mission
Support expenses: the following fall under support expenses- Fundraising, management and general, and membership development expenses
Describe the treatment of charity care in a health care organization, what is charity care
Charity care is not recognized as either revenue or expense on the FS of a health care org
Charity care represents serives for which the health care orgs. do not anticipate any cash flows
What makes dilutive EPS ‘dilutive’ as it relates to the basic EPS
it’s dilutive if the security will produce an EPS less than the basic EPS
When finding diluted EPS, what could be added back to the numerator NET OF TAX?
You add interest expense for bond net of tax (meaning you subtract the tax implications)
What is the order of the Operating section of the statement of cash flows
Net Income \+Depreciation & Amortization \+Losses -Gains -Amortization of Bond Premium -Equity Earnings - (+/-) operating assets \+ (+/-+ operating liabilities
Under GAAP What is interest and/or dividends received classified under in the statement of cashflows, interest paid what about dividends paid? What about under IFRS?
Interest Paid, Interest Received, & Dividends Received:
GAAP = CF Operating
IFRS = CF Operating or Investing
Dividends Paid:
GAAP = CF Financing
IFRS = CF Operating or Investing
For the statement of cash flows, what is the rule for the increase/decrease of CA and CL and if they are +/-
Increase CA –> Subtract
Decrease CA –> Add
Increase CL –> Add
Decrease CL –> Subtract
When you choose the indirect method, what do you have to disclose as a supplemental disclosure
interest and taxes
What does charity care do to revenue
DECREASES IT YOU GOTTA SUBTRACT CHARITY CARE
Identify the major categories of funds used by state and local governmental units
governmental
propriteal
fiduciary
What are the fund accounting principles applicable to governmental funds
current financial resources measurement focus &
modified accrual basis of accounting
can you name each of the 5 governmental fund types
GRaSPP
General Fund special Revenue fund And Service (debt) fund Projects (capital) fund Permanent fund
What are the fund accounting principles applicable to proprietary & Fiduciary funds? specifically the measurement focus and basis of accounting
Measurement focus: economic resources
basis of accounting: full accrual
Can you name the two types of proprietary funds (SE)
Internal Service funds
and
Enterprise funds
Name each of the 4 fiduciary fund types
CIPPOE
Custodial funds
Investment trust funds
Private purpose trust fund
Pension and Other Employee benefit trust funds
What is modified accrual? and what funds use it
it's when revenues should be recognized when measurable and available; expenses are generally recognized when the liability is incurred GRaSPP uses it General Fund special Revenue fund debt Service fund capital Projects fund Permanent fund
Tell me the basic structure of the statement of revenues, expenditures, and changes in fund balance for the governmental funds
Revenues
(expenditures)
+/- other financing sources and uses
=Net change in fund balance
What specialized accounting practices are followed by the governmental funds? this is also the order of the order of recording the journal entrys during the year and at end of year. Are they for the same amounts at the EOY as BOY
BAE - BAE
Budget:
DR: Estimated Revenue
DR: Budgetary Control (if negative/deficit)
CR: Appropriations control
CR: Budgetary Control (if positive/surplus)
Activity: Number of activities to record for
Encumbrance:
DR: Encumbrance
CR: budgetary control
Reverse it out at EOY for the SAME AMOUNTS as Beg of year
When do you accrue/recognize real estate tax and fines/penalties
When billed/ recorded
When do you accrue/recognize income and state taxes
When received
tell me the journal entries to recognize the buying, use, and year end supplies remaining under the purchase method
purchase method:
Buying: DR: Expenditure CR: Vouchers Payable
Use: No Entry
End of year:
DR: supplies on hand inventory
CR: Nonspendable fund balance- inventory
Tell me the JE to recognize a Purchase order on supplies
DR: Encumbrance
CR: Budgetary control
List the two types of interfund transactions
Reciprocal interfund activity: Interfund loans and Interfund services provided and used
Non-reciprocal interfund activity: Interfund transfers and interfund reimbursements
What is the basic structure of the balance sheet for the governmental funds? think equation
CA + Deferred outflow of resources = CL + Deferred inflow of resources + fund balance
What is a special revenue fund and give examples of sources of revenue
its a fund where the revs/expense are legally restricted
examples: ton of taxes and fees and state/federal grantsv
What is the purpose of a debt service fund
it is designed to account for currently due interest and long term obligation debt
it will pay GRSPP debt but NOT SE CIPPOE debt
Whats the purpose of a capital projects fund
to account for restricted resources put toward capital projects such as leasing fixed assets relating to governmental (GRSPP) funds.
NOT RELATED TO proprietary (SE) or fiduciary (CIPPOE) funds
What is the purpose of a permanent fund
to report resources that are legally restricted to the extent which only earnings and not principal may be used for purposes that support the governments programs.
For Governmental funds, GRSPP. What portion of assets and liabilities do you report
ONLY current assets and liabilities
When you buy a fixed asset as a government expenditure, what do you record? and is it depreciated or capitalized?
DR: Expenditure-CAPITAL OUTLAY
CR: Voucher payable (or cash)
and FUCK ASS NO ITS NOT CAPITALIZED or DEPRECIATED
What two governmental funds (GRaSPP) do not record encumbrances
Debt Service Fund
Permanent Fund
what is the purpose of the enterprise fund
account for the acquisition and operation of governmental facilities and services that are intended to be primarily (>50%) self supported by user charges and fees
What are some of the typical revenue sources for enterprise funds (Operating and non-operating)
Operating Revenues: Charges for services (utility fees, patient fees, tuition, etc..)
Non Operating Revenues: Shared/Grant Revenues, and investment income
What are the required fund financial statements for the individual proprietary (SE) Fund types
SE Funds Require: Balance Sheet-Statement of net position Income Statement-statement of revenues, expenses, and changes in fund position Statement of cash flows Footnotes
What is the basic structure of the statement of net position for the proprietary fund (SE)
(Assets + Deferred Outflows of Resources) - (Liabilities + Deferred Inflows of Resources) = Net Position
What is the basic structure of the statement of revenues, expenses, and changes in net position for the proprietary funds (SE)
Operating Revenues (revenues by major sources) (Operating Expenses) =Operating Income (loss) Non-Operating Revenues (expenses) =Income or loss before contributions and transfers \+Capital Contributions Transfers =Change in Net Position Total NEt Position (beginning) =Total Net Position (Ending)
What is the basic structure of the statement of cash flows for the proprietary fund (SE) note the order is reversed of something within here
Cash flows from Operating Activities NonCapital Financing Activities Capital and related financing activities Investing activities
What is the purpose of the private purpose trust fund
it’s the designated fund for reporting all other trust arrangements under which the principal and income are for the benefit of specific individuals, private orgs, and/or other govts
What is the purpose of the investment trust fund
account for external investment pools sponsored by governmental entities…like the state govt acting as an investment agent for counties and cities
What are the required fund financial statements for the individual fiduciary fund types (CIppoe)
Balance Sheet- Statement of fiduciary net position
Income Statement-Statement of changes in fiduciary net position
Footnotes
What is the basic structure of the statement of changes in fiduciary net position for the fiduciary funds
Additions LESS: Deductions \+/- Changes in Net Position Net position- Beginning of the year =Net position end of the year
What is a CAFR? What 3 sections does it include
CAFR = Comprehensive Annual Financial Report
Includes an Introductory Section, Basic Financial Statements and required supplemental info per GASB 34, and a statistical section
What sections of the external financial reporting model represent the basic financial statements
Government-Wide Financial Statements
Fund Financial Statements
Notes to the financial statements
What types of external reports meet the accountability objectives of government (operational and functional accountability)
Operational Accountability: Government wide financials
Fiscal Accountability: Fund Financial Statements
A primary government includes any govt. that meets SELF, what is self
state, city, county or juristriction that can stand by itSELF:
Separately
Elected boards
Legally separate entity
Financially self-sufficient
Define a component unit
organization which the elected officials of the primary govt. are financially accountable or has a relationship with the primary govt. which cannot be left out of the financial statements
What are two methods which are available for reporting component units of a primary govt. in the primary govts. financial statements
Blended: Consolidated with the primary govt
Discrete: shown in seperate column as a component unit
What is the criteria for discrete and blended presentations of the component units
Blended: When the board of the component unit is substantially the same as the primary govt, or the component serves the primary govt exclusively or almost exclusively, or the component is not a legal entity
Discrete: whenever the blended criteria is not met
List the components of program revenues in the statement of activities (SOC)
Service charges
Operating grants and contributions
Capital grants and contributions
Depreciation is recorded for one fund type but not another, what are they
Depreciation is not recorded for governmental funds (GRaSPP) but IS recorded for proprietary funds (SE)
does the propitiatary funds require statement of cash flows? what about the fiduciary fund?
The proprietary fund requires a statement of cash flows
The fiduciary fund does not require a statement of cash flows
What is included in the intro section of a local governments comprehensive annual financial report
Letter of transmittal
What area of activities are not reported in the government wide statement of net position
Fiduciary Activities
What is the threshold (two part test) for identification of a fund as a major fund
. line item must be at least 10% of that line item for the total fund category to which the fund belongs (I.E GRaSPP or E which are governmental funds, or all enterprise funds)
AND
2. line item must be at least 5% of that line item for all governmental (GRaSPP+S) AND enterprise (E) fund.
Name some of the potential reconciling items between fund balance accounts on the BS of the governmental fund financial statements and net position displayed on the government wide FS
CANS
+Capital Assets
-Accumulated depreciation
-Non-current liabilities
+Service (internal) fund net position
Name some of the potential reconciling items between fund balance accounts on the statement of revenues, expenditures, and changes in fund balance of the fund financial statements and net position displayed on the government wide FS
CPAS RIDES
\+Capital Outlay \+Principal Payments on noncurrent debt -Assets Disposals (NBV) -Sources (other financing, debt proceeds) \+Revenue accrual -Interest accrual -Depreciation expense \+Service (internal) fund net revenue
What are the Primary Government governmental activities and what are the Primary Government Business Type Activities as reported on the government wide financials
Governmental: GRaSPP +S
Business Type: E
What funds DONT require a statement of cash flows
GRaSPP and CIPPOE
The governmental fund has the following fund financial statements
Balance sheet and statement of revenues, expenses, and changes in fund balance
When looking at dilutive vs. anti dilutive stuff…what does it mean when you say they are “out of the money”
that means the exercise price is greater than the market price, meaning the shares are NOT dilutive
Stock issuances are considered how when determining the common shares outstanding for EPS calculation? What about contingent shares issued?
Stock issuance’s are accounted for as if they had been issued and outstanding all year long.
Contingent shares are accounted for as of the date the contingency was MET
