Comp. Reveiw Questions Flashcards
Questions I got wrong during the comprehensive review
Walk through the layout of a mutli-step income statement
Net Sales
(less) COGS
= Gross Profit
Less SGA Expenses
= Operating Income
Other income / Expense
= Income from contin. Op (if there is only discontinued operations if not, then its just income before income tax)
Income tax expense
income b4 Disco (net of tax)
Net Income ___
How should the effect of a change in accounting principle that is inseparable from the effect of a change in accounting estimate be reported
As a component of income from continuing operations… reported prospectively as a change in estimate
To be a significant enough to report on, a segment must be at least 10% of
- combined revenues
- Operating profit
- Identifiable assets
When should a long-lived asset be tested for recoverability
when events or circumstances indicate the carrying amount may not be recoverable
Which disclosures are required under IFRS or GAPP:
1) statement of compliance with applicable accounting principles
2) Disclosure of all significant accounting polices
3) Disclosure of judgements made in the preparation of the FS
1) IFRS
2) IFRS & GAAP
3) IFRS
Are start up costs including organizations costs expensed our capitalized
Expensed as incurred without exception
For a patent what is expensed vs Capitalized:
- price
- taxes
- research
- legal costs
- training production staff on use of patent
- admin salaries
- only capitalize the price, tax, and legal fees
When do you use the lower of cost or NRV for inventory
or the Lower of cost and market
1) - FIFO / WA (IFRS and GAAP)
2) LIFO / Retail (only GAAP)
how do you find the carrying amount of the bond (add what two things)
beginning carrying amount (or ending PY)+ amortized discount of current year
FX conversion gains associated with translations of financial statements are reported where
AOCI
What is functional currency
Functional currency is the currency of the primary economic environment in which the entity operates, it is usually the local currency but not always
What are the qualitative enhancing characteristics of data
Timeliness, understandability, and comparability and verifiability are used to enhance the usefulness of information that is relevant and faithfully represented
Useful information must exhibit the fundamental qualitative characteristics of
Faithful representation and relevance
What are the components of Relevant information
Materiality, predictive value, and confirming value
What are the fundamental qualitative characteristics of useful information and their components
Relevance (PCM): Predictive Value, Confirmatory Value, Materiality
Reliable (faithful) Representation (CNM) Complete, Neutral, Free from Error (Material)
