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Johan's Custom FAR > All FAR > Flashcards

All FAR Flashcards

1
Q

What are the 2 questions does accounting ask?

A

One. Did the company make or lose money, and how much.

Two. How much is the business worth

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2
Q

When are quarterly results due?

A

Quarterly results are due not more than 45days after the quarter ends.

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3
Q

Who are primary users of accounting information?

A

The existing and potential stock holders and investors are considered to be primary users.

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4
Q

F A S B to G A A P?

A

F A S B codifies U S, GAAP

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5
Q

Private companies reporting rules?

A

Private companies do not have file quarterly reports but do have to have an annual report issued.

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6
Q

Who are secondary users of accounting information?

A

Secondary users include regulators, and members of the public, who are not investors.

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7
Q

Expires cost are also known as?

A

Expired cost can also be referred to as expenses.

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8
Q

Unexpired cost are also known as?

A

They can also be referred to as assets

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9
Q

***Order of transactions from start to closing accounts?

A

Journal entries, T accounts, trail balance, financial statements, Income Statement this, Balance sheet. The income statement closes out to income summary.

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10
Q

What accounts do adjustments entries have in common?

A

Adjusting entries impact both the income statement and balance sheet.

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11
Q

Accrual VS deferral

A

A deferral is cash now and income statement later, and accrual is income statement now, cash later.

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12
Q

Anytime A R increases for the year, compared to cash basis?

A

Accrual basis revenue will be higher than cash basis revenue, as income has been earned but cash not collected.

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13
Q

How to go from cash basis revenue to accrual basis revenue?

A

Add in year end balance A R. This will represent revenue that has been earned but not collected.

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14
Q

How to go from cash to accrual basis for an expense account?

A

Start with the amount payed in that year, add in yearend balance, and subtract starting balance.

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15
Q

Full disclosure principal

A

To achieve full disclosures the F S are supplemented by footnotes, not all disclosures need a foot note.

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16
Q

What is M D A

A

M D A is a disclosures, this is required for an issuer, but not for nonpublic company, it covers, Operations Liquidity and capital recourses of the F S in a narrative format. M D A may contain things that may not be in another foot note.

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17
Q

What is the summary of significant accounting Policies, and what does it include?

A

This is generally the first or second footnote that is disclosed, it covers principles, or methods that were chosen by management that are allowed for by G A A P.

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18
Q

What topics are covered by significant accounting policies (5)?

A

One, chosen method of deprecation. Two, Chosen method of valuing inventory. Three, the securities chosen as cash and cash equivalents. Four, basis for consolidation. Five, revenue recognition policies. * With I F R S, it has to be disclosed that the statements comply with I F R S.

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19
Q

What is not considered significant accounting policies?

A

One, Information regarding Debt specifics. Two, carrying value of gains and losses. Three information about pension plans. Four, Details about changing accounting policies.

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20
Q

What are sources of risk and uncertainties that require disclosure (5)?

A

One, nature of the entity’s operations. Two use of estimates in financial statements. Three certain significant estimates. Four, vulnerability to certain concentrations. Five, going concern assessments.

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21
Q

Going concern time frame evaluation by management?

A

Management have to evaluate if there is any going concern with the entity within a year of the F S being issued.

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22
Q

What are the threshold for going concern disclosure and F S presentation?

A

Substantial doubt exist when there is reasonable doubt about the company continuing %70 or greater.

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23
Q

If there is a reasonable change in an estimate that will be material to the F S….?

A

Disclosure should be made in the F S.

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24
Q

US G A A P vs I F RS judgements?

A

I F R S requires significant judgments to be disclosed, G A A P does not.

25
Q

What is risk due to concentration?

A

This is when the customer only has one customer, or one product, or only one source of income.

26
Q

Vulnerability to concentration threshold?

A

When 60% or more from one entity is vulnerable to loss.

27
Q

When is vulnerability disclosure needed? (3)

A

One, the concentration exists at the balance sheet date. Two, a significant impact could cause financial disruption to the firm in the near term. Three, It reasonably possible that event causing severe impact will occur in the near term.

28
Q

What are the 4 concentrations that should be considered for disclosure?

A

One, concentration in source of revenue or funds. Two, concentration in supply. Labor, materials, etc. Three, Concentration in specific geographic location. Four, concentration in revenue due to volume from one source.

29
Q

What is a type 1 subsequent event?

A

A type 1 subsequent event is one that is recognized, and thus the F S have to be redone to take the event into consideration. The condition would also have to have occurred before year end example lawsuit which loss was accrued.

30
Q

What is a type 2 subsequent event?

A

The condition is not present as at year end, and disclosure only, do not adjust the prior F S. Thus this is not recognized event.

31
Q

What is the window for subsequent event?

A

For G A A P the window for subsequent event is the date between F S date and the date that the statements are issued. For non-issuer it is when they are available to be issued.

32
Q

What is the cutoff date for subsequent events under I F R S?

A

The cutoff date under I F R S is when the statements are authorized for issuance either by the board of directors, or another regulatory body.

33
Q

Subsequent event window and stock split, and stock dividends?

A

Under G A A P if this occurs, it should be reflected in the prior period statements, Under I F R S, no restatement is needed.

34
Q

What is segment reporting?

A

A large conglomerate is required to report on each division which is considered a segment. Information has to be able to be discrete. For publicly traded companies only.

35
Q

When is a segment re portable?

A

Has to pass any one of the following rules. One, more that 10% or more of total revenue or sales (can related party transactions count as well). Two, 10% of total assets. Three, 10% of profit or loss (Use the biggest profit or lowest loss, do not net use absolute value). If a segment passes any one of these test under G A A P are re portable.

36
Q

Segment 75% rule?

A

75 percent of sales to external parties only, the first largest segments that total to 75% of total external revenue only should be reported.

37
Q

What is expense and revenues are considered re portable for segments?

A

Only discrete expenses and revenues are considered, this means that interest income would not be included or allocated to a segment, unless it was specific to that segments operation.

38
Q

What is operating profit?

A

This is income before interest and taxes.

39
Q

Significant customer disclosures.

A

If a company in subject to segment disclosure reporting, any single customer that responsible for 10% or more in revenue to the business is considered a significant customer and should be disclosed. (Sales to internal and external customers is taken into consideration.

40
Q

What are the three values that are needed for relevance?

A

Predictive value, confirming value, and immateriality.

41
Q

What is faithful representation?

A

This means that F S information is complete, neutrally, and freedom.

42
Q

What are enhancing characteristics?

A

These characteristics, increases the usefulness of the qualitative characteristics.

43
Q

What are the four enhancing characteristics?

A

One, verify-ability , different knowledgeable individuals can come to the same consensus about what is represented. Two, comparability, prior periods, similar business are comparable. Three, Understand ability the users that the information is meant for can understand it. Four, timeliness the information is relevant in the time frame that it is released. Remember V CUT. (Gay, lmao)

44
Q

What are the four enhancing characteristics?

A

One, verify-ability , different knowledgeable individuals can come to the same consensus about what is represented. Two, comparability, prior periods, similar business are comparable. Three, Understand ability the users that the information is meant for can understand it. Four, timeliness the information is relevant in the time frame that it is released. Remember V CUT. (Gay, lmao)

45
Q

How are assets and liabilities measured?

A 
P P & E – Historic
Inventory - replacement cost
A R – Net realized value
Marketable securities – market to market
Inventory - replacement cost
46
Q

What are fundamental assumptions?

A

Entity assumption, entity is separate from the owner. Going concern assumption, company will continue to operate unless issue is disclosed. Monetary unit, financial activity is measured in some form of currency. Periodicity assumption, economic activity can be divided into meaningful time periods.

47
Q

What is the matching principle?

A

This is the principal that expenses are matched to the same period in which there associated revenue is earned.

48
Q

Principal markets and transaction cost.

A

Once you know the principal market, ignore the transaction cost to get F M V

49
Q

What are the 3 types of fair value assessment?

A

One, Market approach, real market transactions generally used for financial market securities. Two, Income approach, based on future cash flows/income., Three, Cost approach, what it would cost to replace the replace the asset.

50
Q

Fair value option once elected…?

A

It cannot be revoked.

51
Q

Hierarchy of fair value

A

Level 1, consists of unadjusted prices in active markets these are observable. Level 2, quoted prices for similar items, in active markets, these are also observable. It will as included the price of the item in inactive markets with the identical item. Level 3 are observable unobservable, should only be used when level 1 and 2 are not available. Should use the best information, even if it from the entity.

52
Q

What are the fair value disclosure requirements?

A

When reporting on fair value the valuation technique should be listed, when different valuation methods are used for same type assets or liabilities. The level should also be disclosed.

53
Q

What is the blockage factor?

A

When the company holds a sizeable amount of the good in a particular market.

54
Q

How to book gross method?

A

Book initial sale as if there I no discount that is given.

55
Q

What is the blockage factor?

A

When the company holds a size-able amount of the good in a particular market.

56
Q

Bad debt write offs and G A A P V S I R S

A

G A A P requires the use of an estimated method (as a percentage of sales or A R), the direct write off method is used for tax purposes.

57
Q

How to record a bad debt expense, allowance for doubt full accounts (Credit/Debit)?

A

Bad Debt is an expense account, to increase an expense account debit it, thus the allowance t account will be credited, net effect is A R is reduced.

58
Q

What disclosures are required by G A A P (3)?

A

Disclosures are required for nature of a firms operations, use of estimates and significant estimates, vulnerability to significant concentrations.

59
Q

What are the disclosures that are needed for nature of operation?

A

Nature of operation disclosures include, Products and services, Geographic locations, and principal markets.

Johan's Custom FAR (1 decks)

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