Unit 2 questions Flashcards
Current assets include:
(1) cash and cash equivalents;
(2) certain individual trading, available-for-sale, and held-to-maturity securities;
(3) receivables;
(4) inventories; and
(5) prepaid expenses
A deposit received from a customer is a current asset or liability?
current liability
Prepaid expenses are what on the Balance sheet?
Current assets
Is treasury stock a current asset?
No- it is an equity item. It is presented as a reduction of total equity
The balance sheet reports assets, liabilities, equity, and their relationships at a moment in time. It helps users to assess:
liquidity, financial flexibility, and risk
Current assets are reasonably expected to be realized in cash, sold, or consumed during:
the normal operating cycle of the business or within 1 year, whichever is longer.
Purchase of Treasury Stock is recorded on what statement in what section?
On the statement of financial position as a decrease in shareholders’ equity.
On a statement of financial position, all of the following should be classified as current liabilities except
A.Deferred income taxes for differences based on depreciation methods.
B.Advances from customers for services to be performed.
C.Accounts payable for inventory items to be shipped on consignment.
D.Salaries payable for work performed during the previous month.
Answer (A) is correct.
Deferred tax amounts are classified as current or noncurrent based on the classification of the related asset or liability (assuming such an asset or liability exists). Because depreciable assets are noncurrent, a deferred tax liability for differences based on depreciation methods is noncurrent
Accumulated other comprehensive income is reported in which financial statement?
Accumulated other comprehensive income is an equity account. All equity accounts are reported on the statement of financial positions (balance sheet) of an entity.
A statement of financial position provides a basis for all of the following except
A.Evaluating capital structure.
B.Assessing liquidity and financial flexibility.
C.Computing rates of return.
D.Determining profitability and assessing past performance.
Answer (D) is correct.
The statement of financial position, also known as the balance sheet, reports an entity’s financial position at a moment in time. It is therefore not useful for assessing past performance for a period of time. A balance sheet can be used to help users assess liquidity, financial flexibility, profitability, and risk.
Deferred tax liability that arose from depreciation is a current asset?
No, because it is associated with a noncurrent asset. Thus, the deferred tax liability is also noncurrent.
If a ST contruction loan at the balance sheet date, but was refinanced through issuance of LT bonds after year end but before the issuance of the FSs, how should that be classified on the BS?
ST debt that is refinanced by a post balance sheet date issuance of LT debt should be classified as noncurrent, because the ability to refinance on a LT basis has been demonstrated.
When do dividend become a current liability?
Dividends do not become a legal obligation of the entity until declared.
how do you calculate RE this year if last years is available?
RE from last year + ((revenues-expenses)*(1- tax rate))= RE this year
Which is a current asset or a current liability?
Costs in excess of billings on LT contracts
Billings in excess of costs on LT contracts
Costs in excess of billings on LT contracts - CA (earned)
Billings in excess of costs on LT contracts -CL (not earned)
When calculated retained earnings- are unappropriated and restricted added together?
Yes. Add those together- do not exclude the “restricted REs”
Financial liabilities under IFRS are current if they are due to be settled within 12 months even if:
(1) the original term was for more than 12 months and
(2) an agreement to refinance on a long-term basis was completed after the balance sheet date and before the issuance of the financial statements
Advertising is a selling expense or general and administrative?
Selling expense
