Brainscape's Knowledge GenomeTM


Top Flashcards (Certified)
All Flashcards

FAR > F1-F4 Topics > Flashcards

F1-F4 Topics Flashcards

(60 cards)

Start Studying
1
Q

Formula for Income recognized in current year using Percentage-of-Completion Method

A

Contract Sales Price
- Estimated Cost of Contract
= Total Gross Profit

x % of Completion
= Gross Profit Earned

  • Income Previously Recognized
    = Income Recognized in Current Year
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

Order of Income Statement Items (Multiple Step)

A 
Revs (Operating) 
- Expenses (Operating)
= Income from Operations 
\+ Other Revs/Gains (Continuing/Non-operating)
- Other Exps/Losses (Continuing/Non-operating)
= Income Before Income Tax 
- Income Tax Expense 
= Income from Continuing Operations
-Discontinued Operations (NET OF TAX)
= Net Income
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

When is Net Concept and Gross Concept Used?

A

Net Concept = Non-operating Gains and Losses

Gross Concept = Operating Revs and Exps

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

When are current assets recorded and current liabilities recorded during CIP

A

Current Asset = When Cumulative Costs + Cumulative Estimated Earnings > Cumulative Billings
Current Liability = When Cumulative Billings > Cumulative Costs + Cumulative Estimated Earnings

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

Explain Forward/Call Option Scenarios

A 
Forward = Obligation to Repurchase 
Call = Right to Repurchase

If Repurchase Price < Original = LEASE
If Repurchase Price >= Original = FINANCING AGREEMENT

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

Explain Put Option Scenarios

A

Put Option = Obligation to Repurchase at Customer’s Request

Repurchase Price < Original

  • Repurchase Price > Market Value = LEASE
  • Repurchase Price < Market Value = A SALE W/ RIGHT OF RETURN

Repurchase Price >/= Original

  • Repurchase Price > Market Value = FINANCING AGREEMENT
  • Repurchase Price < Market Value = A SALE W/ RIGHT OF RETURN
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

Changes in Accounting Estimates

A

Affect only current and subsequent periods (PROSPECTIVE)
No adjustments to retained earnings
Income from continuing operations
‘Inseparable’ = To LIFO, Change in Depreciation Method

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

Error Correction

A

Adjusting beginning retained earnings net of tax (Prior period adjustment)
Restated, Offsetting adjustment NOT made
Non-GAAP -> GAAP

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

Changes in Accounting Principal

A

Cumulative effect reported net of tax as an adjustment to beginning retained earnings in earliest period (RETROSPECTIVE)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

Other Comprehensive Income Items

A

PUFIE -> Equity/AOCI

  • Pension Adjustment
  • Unrealized G/L from AFS
  • Foreign Currency Items
  • Instrument-Specific Credit Risk
  • Effective Portion of CF Hedges
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q 
Define:
Deferred Revenue 
Deferred Expense 
Accrued Revenue
Accrued Expense
A

Deferred Revenue = Cash received before revenue earned
Deferred Expense = Cash paid before expense incurred
Accrued Revenue = Cash received after revenue earned
Accrued Expense = Cash paid after expense incurred

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

Differentiate Recognized Subsequent Events vs. Non-recognized Subsequent Events

A 
Recognized = Existed @ B/S Date, Record JE and Disclose
Non-recognized = Did not Exist @ B/S Date, Disclose only
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

SEC Filers vs. Non-SEC Filers when it comes to disclosing SE evaluation period

A

SEC Filers = Not required to disclose

Non-SEC Filers = Required to disclose

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

Summary of Significant Accounting Policies may include…

A 
Measurement Basis used in preparing F/S and Accounting Principles 
Basis of Consolidation
Depreciation Methods
Amortization & Intangibles
Inventory Pricing 
Use of Estimates
Fiscal Year Definition
Special Revenue Recognition Issues
Criteria for which Investments are Cash Equivalents
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

How to determine FV of Non-financial Asset

A

Highest and Best Use (Fixed Assets)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

Most Advantageous Market Vs Principal Market

A

Most Advantageous = Market with best price for asset

Principal = Market with greatest activity

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q 
10-K
10-Q
11-K
20-F/40-F
6-K
8-K
Forms 3,4,5
A 
Annual
Quarterly
Employee Benefit Plan
Non-US Annual/Canadian Annual 
Semi-annual filed by foreign private users = Unaudited
Major Events
>10% Owners = NO F/S
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

Filing Deadlines Form 10-K vs 10-Q

A

Form 10-K

  • Large Accelerated = 60 Days (700M)
  • Accelerated = 75 Days (75-700M)
  • All Others = 90 Days (75M)

Form 10-Q

  • Large Accelerated = 40 Days (700M)
  • Accelerated = 40 Days (75-700M)
  • All Others = 45 Days (75M)
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

Converting Cash Basis to Accrual

Balance Sheet vs. Income Statement

A 
B/S:
Add Inc. A
Subtract Inc. L
Add Dec. L
Subtract Dec. A

I/S
OPPOSITE

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
20
Q

Cash to Accrual REV

A 
Cash Basis Rev
\+ Ending AR
- Beginning AR
- Ending Unearned Rev
\+Beginning Unearned Rev
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
21
Q

Cash to Accrual COGS

A 
Cash Paid for Purchases
\+ Ending AP
- Beginning AP
- Ending Inventory
\+ Beginning Inventory
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
22
Q

Cash to Accrual Expenses

A 
Cash Paid for Op. Expenses
\+ Ending Accrued Liabilities 
- Beginning Accrued Liabilities 
- Ending Prepaid Expenses 
\+ Beginning Prepaid Expenses
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
23
Q

All TURNOVER Ratios

A

I/S divided by B/S

B/S item = Avg.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
24
Q

All RETURN ON Ratios

A

Net Income Divided by Avg. B/S item

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
25
Partnership Creation Methods
Exact Method Bonus Method Goodwill Method
26
Withdrawal of a Partner Journal Entries
Bonus Method = Capital Accounts Debited (SUBTRACTED) | Goodwill Method = Capital Accounts Credited (ADDED)
27
Difference between Gross Method and Net Method - Discounts
``` Gross = Records w/o regard to discount Net = Records net of available discount ```
28
Direct Write-Off Method
No journal entry until WO NOT GAAP - NO ALLOWANCE Write Off: Debit Bad Debt Expense Credit A/R Collection: Cash Uncollected Acc. Recovered (Rev)
29
Allowance Method (Contra Asset)
Inc. in Allowance Debit Bad Debt Expense Credit Allowance Write Off: Debit Allowance Credit A/R ``` Collection Debit A/R Credit Allowance Debit Cash Credit A/R ```
30
Factoring A/R
Without Recourse = Sale is final - Buyer assumes risk | With Recourse = Factor has option to re-sell any uncollected receivables back to seller
31
Discounting a Note to bank = CASH NOW
Principal x original% x month/year = Interest Principal + Interest = Maturity Maturity x discounted% x time remaining = Interest to bank (DISCOUNT) Interest - Discount = Interest to Seller Total to seller = Principal + Interest to Seller Paid by Bank = Maturity - Discount
32
Lower of Cost and NRV vs Lower of Cost or Market
Lower of Cost and NRV (FIFO/WA) Lower of Cost or Market -Choose Middle of Replacement Cost, NRV, and NRV - Profit
33
Periodic vs Perpetual Inventory
Periodic = 1 JE at time of sale, determined by physical count, COGS determined by plugging Perpetual = 2 JE at time of sale, Inv. updated for each sale/purchase *Same results for FIFO*
34
Weighted Avg. and Moving Avg.
Weighted Avg. - Total Costs of Inventory Available/Total number of Units Available - Periodic Moving Avg. - Weighted Cost after each purchase - Perpetual
35
Dollar-Value LIFO - Price Index
Price Index = End Inv. @Current Year Cost / End Inv. @Base Year Cost LIFO Level @Base Year Cost x Price Index = At Dollar-Value LIFO Beginning Inv. + Layers = End Inv.
36
Gross Profit Method
- Quarterly/Interim F/S - Periodic Sales - (1 - GP%) = COGS Beg. Inv. + Purchases - COGS = End Inv.
37
Property, Plant and Equipment Costs
Property: - Purchase Price - Broker's Commission - Title and Recording Fees - Legal Fees - Swamp Draining - Clearing - Site Development (Grading) - Existing Obligations Assumed - Demolition of Old Buildings Plant: - Purchase Price - Repairs neglected by previous owner - Alterations/Improvements - Architect's Fees - Construction Period Interest Equipment: - Invoice Price - (Cash Discounts) - Freight-In - Installation/Rearrange - Taxes * All related to acquisition/construction
38
Capitalization of Period Interest
- Based on WA of accumulated expenditures as part of cost of producing FA * Borrowed and Used* Total Capitalization Cost cannot exceed actual Interest Cost (CAP) Remaining = Interest Expense on I/S Capitalized during term of construction/building decisions made/during ordinary delay
39
Asset Retirement/Sold
``` Debit Cash Credit Asset (@Historical Cost) *Plug = Accum. Dep. ```
40
Units of Production Depreciation
(Cost - Salvage) / Estimated Units per Hour = Rate | Rate x # units = Dep. Exp.
41
Depletion
Depletion Base = Cost + Development + Restoration - Residual Rate = Base / Estimated Recoverable Units Depletion = Rate x Extracted
42
Non-monetary - Commercial Substance
Debit FV of Given Up Debit Accum. Dep. Credit Asset @Historical Credit Cash Paid *Plug Gain/Loss FV - BV of Asset
43
Non-monetary - Lacks Commercial Substance
No Boot Received = No Gain Boot is Paid - <25% = No Gain Boot is Received - <25% = Proportional Gain Boot is Received - >=25% = All Gain Plug for Debit Credit BV of Asset Given UP!
44
Involuntary Conversions
"Sell" to insurance company SP = Proceeds Gain = Condemnation - BV
45
Intangibles: Capitalized vs. Expensed
Purchased - Capitalized @Cost Internally Developed - Expensed ``` Exception: Legal fees to successful defense Registration/Consulting fees Design Costs Direct Costs to secure asset ```
46
Franchising
Capitalize Given Up: - Cash - FV Asset - PV Note - FV Stock Continuing Franchising Fee = Expensed
47
Start Up Costs/Research and Development Costs
Start Up - Expensed Research And Development - Expensed EXCEPT if have alternative uses Not Considered R&D: - Routine Design Changes - Marketing - Quality Control Testing - Reformation of Chemical Compund
48
Computer Software Development Costs
- Exp. until tech feasibility established - Capitalize until released for sale - Amortize expenses Amortization is greater of: - Capitalized Amount x (Current Rev / Projected Rev) - Capitalized Amount / Economic Life
49
Impairment for Intangibles
1. Undiscounted CF < Cost 2. FV < BV Restoration not Permitted for Held for Use Restoration Permitted for Held for Disposal
50
Investment in Debt Securities Classifications
Trade Securities - CF from Operations - Bought and held for purpose of selling in near term - All G/L on I/S @Fair AFS - CF from Investing - Realized G/L on I/S @Fair - Unrealized G/L in Equity OCI @Fair HTM - CF from Investing - Intent and ability to hold to maturity - @Amortized Cost
51
Valuation @FV
Unrealized TS ->Earnings Debit Unrealized Loss on TS Credit Valuation Account Unrealized AFS -> OCI (NET OF TAX) Debit Unrealized Loss on AFS Credit Valuation Account
52
Impairment of Debt Securities
HTM -Expected Credit Loss = PV - Amortized Cost (-) Debit Credit Loss Credit Allowance for Credit Losses AFS - Gain = Unrealized Gain to OCI - Loss to I/S to extent of ECL - Excess Loss to OCI
53
Sale of Debt Securities
TS: Selling Price - Carrying Value @time of sale Debit Cash Credit Realized Gain Credit Trading Security ``` AFS: Selling Price - Original Cost Debit Cash Debit Unrealized Gain *Reversed from AOCI* Credit AFS Credit Realized Gain ```
54
Income from Equity Investments (FVTNI)
-Normal Cash Dividends Debit Cash Credit Dividend Income -Liquidating Dividend (Dividend paid in excess of %RE = ROC) Debit Cash Credit Dividend Income Credit Investment
55
Equity Method Accounting
Record Investment: Debit Investment Credit Cash Share of Earnings: Debit Investment Credit Income Dividends: Debit Cash Credit Investment *Stock Div Memo entry only*
56
Consolidation Adjustments (CAR IN BIG)
``` Common Stock, APIC, and RE eliminated = A - L Investment in Sub eliminated Non-controlling Interest created B/S of Sub Adj. for FV Identifiable Intangibles recorded @FV Goodwill/Gain required *plug* ``` * Legal Fees = Expensed * Registration Fees = Reduce APIC Contingent Consideration = ADD estimate to Investment and CREDIT liability expected value
57
Intercompany Bond Transactions
Debt Considered Retired Gain/Loss Recognized Eliminate Intercompany Interest and Amort. of Disc./Prem.
58
Intercompany Sale of Land
G/L remains unrealized until land sold to outsider Period of sale, eliminate G/L and adjust to original cost Subsequent years: RE debited and land credited until sold to 3rd party
59
Intercompany Profit on Sale of Dep. F/A
Unrealized G/L until asset sold to outsider | Eliminate G/L and adjusts asset and Accum. Dep. to original balance on date of sale
60
Consolidation Rules
Assets/Liabilities: Include Parents and FV of Sub Investment in Sub: Eliminate Equity/CAR: Include Parents and Eliminate Subs NCI: FV of Sub Income/Expenses: Include Parents and 100% Subs after acquisition Intercompany Transactions: Eliminate 100%

FAR (3 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2025 Bold Learning Solutions. Terms and Conditions