FAR 1

Question 1

Qualitative Characteristics

Answer 1

Relevance and Faithful representation

Question 2

Relevance (Qualitative characteristics)

Answer 2

1. Predictive value - allows investors to predict future outcomes
2. Confirm Value - provides feedback about evaluations previously made by users
3. materiality - info is material if an omission or misstatement of the information could affect the decisions

Question 3

Faithful Representation

Qualitative Characteristics

Answer 3

1. Completeness - complete depiction of F/S
2. Neutrality - free from bias
3. Freedom from erros

Question 4

Realization

Answer 4

Converting noncash resources right into money

realize gain/loss

Question 5

Recognition

Answer 5

Process of reporting an item

Question 6

Enhancing Qualitative Characteristics

Answer 6

1. Comparability
2. Verfiability
3. Timeliness
4. Understandability

Question 7

Elements of PV measurement

Answer 7

1. Price for bearing Uncertainty
2. Expectations about Timing Variations of Future cash flows
3. Other Factors
4. Time value of Money
5. Estimate future cash flow

Question 8

Rule of Conservatism

Answer 8

1. Revenues and gains should be recognized when EARNING PROCESS IS COMPLETE
2. Expense and losses recognize IMMEDIATELY

Question 9

Replacement cost

Answer 9

Cash or equivalent that would be paid to acquire an asset currently
It is an ACQUISITION COST

Question 10

Current market value, fair value

Answer 10

The value to sell an asset

Question 11

Historical cost

Answer 11

The amount paid by the company purchase the asset

Question 12

Net realizable value

Answer 12

selling price - cost of disposal

Question 13

Accounting standards Update is issued only after…

Answer 13

A majority vote of the members of FASB

Question 14

International Accounting Standard Board (IASB) Framework fundamental assumption

Answer 14

Going concern

Question 15

Before issuing a new International Financial Reporting Standard, it must be…

Answer 15

approved by at least 9 members of IASB

Question 16

According to the FASB conceptual framework, financial reporting to be useful, it must

Answer 16

Provide information useful for making business and investment decisions

Question 17

Summary of significant accounting policies

Answer 17

1. Should disclose policies

Example:

1. Criteria for determine certain things
2. basis of profit recognition

Question 18

Info presented in Notes to F/S have the purpose of…

Answer 18

Providing disclosures by GAAP

Question 19

Related Party disclosures

Answer 19

GAAP - only loans to officers

IFRS - include loans to officers and key management compensation

Question 20

Significant estimates should be disclosed when it is…

Answer 20

Reasonable possible (NOT PROBABLE) that the estimate will change in the near future

Question 21

Criteria to be included as reportable operating segments

Answer 21

1. Operating segment ‘s revenue > 10% of total (combined) revenue

Revenue should be both intersegment sales and sales to unaffiliated customers

2. segment’s assets constitute more than 10% of combined assets of all operating
3. reported profit/loss > 10%
   Step 1: Add all the income together
   step 2: add all the loss together
   step 3: pick the greater of income or loss x 10%
   step 4: if the component income/loss is GREATER THAN amount in step 3, then it is a reportable segment
   CPA - 05055

Question 22

Operating profit by segments is based on measure of profit reported to…

Answer 22

Chief Operating Decision Maker

Anything not reported to chief operating decision maker is not included in segment operating profit

General expenses, income taxes, gain/loss from discontinued operation are not included in operating segment profit

Question 23

To conform with GAAP, F/S for public business enterprise must report segment info about a company’s major customers if…

Answer 23

that customer provides 10% or more of the combined revenue of all opertaing segments

Question 24

Which type of entity required to report on business segments

Answer 24

only publicly-traded companies

Question 25

Which segment financial statement is not reported under IFRS

Answer 25

Statement of cash flow

Question 26

Which segment F/S is not reported under GAAP

Answer 26

segment liabilities

Question 27

Unaudited Financial statements | not required to be included in audited financial statements

Answer 27

1. Form 6-K - filed semi-annually by foreign private issuers | 2. Form 10-Q - filed quaterly by U.S registered companies

Question 28

Audited Financial Statement

Answer 28

1. 10-K - U.S. registered audited companies 2. 40-F annual specific Canadian companies registered with SEC 3. 20-F - filed annually by non-U.S registrants registered with SEC

Question 29

Under Regulation S-X, audited F/S filed with SEC should include

Answer 29

Balance Sheet - 2 years Income statement, Changes in owners' equity and cash flow for 3 fiscal year

Question 30

Maximum number of days for filing for 10-K

Answer 30

1. Large accelerate filers - 60 days (700 million floats) 2. accelerate filers - 75 days (> 75 million float) 3. non-accelerated - 90 days

Question 31

Statement of periods presented

Answer 31

1. BALANCE SHEET - end of most recent fiscal quarter and as of the end of the preceding fiscal year (corresponding fiscal quarter for the preceding fiscal year is not required unless necessary to understand seasonal fluctuations) INCOME STATEMENT - most recent fiscal quarter, period between the end of preceding fiscal quarter and the end of most recent fiscal quarter, and coressponding periods of the preceding fiscal year May also include 12 month period STATEMENT OF CASH FLOWS - end of the preceding fiscal year and end of most recent fiscal quarter corresponding period for preceding fiscal year

Question 32

XBRL is required for

Answer 32

10-K, 20-F, 6-K Present F/S, including B/S, statement of comprehensive income, and all footnotes, and any applicable F/S schedules be prepared using XBRL

Question 33

Maximum filing period for 10-Q

Answer 33

1. large accelerated filer - 40 days | 2. small filer - 45 days