Deck3

Question 1

Formula for adjusting Income from Accrual Basis to Cash Basis

Answer 1

C = L - OA

Question 2

Formula for adjusting Income from Cash Basis to Accrual Basis

Answer 2

C = - L + OA

Question 3

The recovery of accounts written off is revenue. T or F

Answer 3

F

Question 4

Recovery for accounts written off is an adjustment to uncollectable accounts. T or F

Answer 4

T

Question 5

Collection of a note receivable from a related party is investing activity. T or F

Answer 5

T. The fact that it is a note implies interest and lending would be considered investing activity since the company is not in the investing business.

Question 6

What type of activity is a Tax Refund?

Answer 6

Operating Activity

Question 7

Mneumonic for information on Statement of Cash Flows

Answer 7

OIF - Operating, Investing, Financing

Question 8

How are liabilities listed on the Balance Sheet?

Answer 8

Order of Maturity - Current liabilities first, Long Term liabilities last etc.

Question 9

What financial statement are prior period adjustments reported on?

Answer 9

Statement of Retained Earning - They are adjusted to the beginning balance

Question 10

Changes to codification by FASB are accomplished through________________.

Answer 10

Accounting Standards Updates (ASU’s)

Question 11

Monetary Unit Assumption

Answer 11

Implies that the home countries currency is the best used to report information on the financial statements

Question 12

Going concern assumption

Answer 12

Assumes there is no foreseeable end the entity

Question 13

Periodicity assumption

Answer 13

That for the financial statements to be useful, they must be available periodically and not just at the end of an entity’s existence

Question 14

Economic Entity

Answer 14

The assumption that the corporation is a separate entity from the owners

Question 15

When liquidation of a company is in the near future, what should it use to value it’s assets? (a) historical cost (b) net realizable value

Answer 15

(b) net realizable value - the historical cost no longer matters when the firm no longer has the going concern assumption

Question 16

The price that some assets are valued at, that reflect what cash or equivalent would be paid to acquire the same asset

Answer 16

Replacement Cost

Question 17

Mneumonic for Primary Charictaristic - FAR

Answer 17

Faithful Representations and Relevance

Question 18

“Faithful Representation” answers the question “___________________”?

Answer 18

Can I depend on it?

Question 19

3 Charicatristics of Faithful Representaiton

Answer 19

Completeness, Neutrality, Free from Error

Question 20

What question does “Relevance” answer?

Answer 20

Does it relate to my decision?

Question 21

The determination of “Fair Value” may be for a Stand Alone Asset or a Group of Assets or Liabilities. T or F

Answer 21

True