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Flashcards in Basic Concepts Deck (31)
1

How do you convert cash payments to suppliers to CGS? (Formula)

Cash payments to suppliers
+ Inc in A/P
- Inc in Inv
=CGS

2

What org is responsible for setting IFRS?

International Accounting Standards Board (IASB)

3

What are the two main components that contribute to the main objective of decision usefulness?

Relevance and Faithful Representation

4

What are the components of relevance?

Confirmatory Value
Predictive Value
Materiality

5

The balance a deferred revenue account should reflect what?

The liability for outstanding performance obligations.

6

Earnings EXCLUDE certain gains and losses that are INCLUDED in comprehensive income? TF

True

7

Earnings INCLUDE certain gains and losses that are EXCLUDED in comprehensive income? TF

False

8

How would you compute the total debits to installment AR?

Deferred GP/GP Ratio

9

How would you compute cash collections?

Total debits to AR (DGP/GP Ratios) - AR ending balance

10

How would you compute GP realized?

GP Ratio x Cash Collections

11

What are the components of faithful representation?

Neutrality
Free from material error
Completeness

12

What are enhancing characteristics of financial information?

Comparability
Understandability
Timeliness
Verifiability

13

What is the final step before issuing a new FASB statement?

A majority vote by the members of the FASB

14

Revenues are recognized when...

They are realized/realizable and have been earned

15

Cash basis accounting includes AR. TF

False

16

Cash basis accounting includes unearned revenues? TF

True

17

Collections = Cash basis Revenues. TF

True

18

Collections are subtracted from AR. TF

True

19

Sales Revenues = Cash basis Revenues. TF

False. Only collections = cash basis revenues.

20

Inability to determine BI for supplies would cause NI to be understated. TF

F. Overstated, due to supplies expense being understated for the year.

21

Inability to determine BI for supplies would cause OE to be understated. TF

False. There would be no effect on OE.

22

What is the formula for Deferred Gross Profit?

DGP = GP Rate x AR

23

What is the private company council?

An organization that will assist setting accounting standards for private companies established by the FAF.

24

The private company council allows private entities to amortize goodwill. TF

True

25

When is liquidation basis accounting required?

When liquidation is imminent

26

Assets are presented at fair value under the liquidation basis?

False. The are presented at the amount of cash expected from the liquidation process.

27

The statment of changes in equity is a required account under US GAAP. TF

False, shareholders equity

28

Prepaid taxes are not current assets. TF

True

29

Gains and losses on sales of plan assets are recorded in what section of the statement of cash flows prepared using the indirect method?

Operating

30

What is the defensive interval ratio?

The ratio of quick assets to daily operating expenditures. Measures liquidity

31

Notes payable are not to be measured at anything other than their original amount during liquidation. TF

True