FAR

Question 1

What items are in current assets?

Answer 1

Cash, AR, Inventory, prepaid expenses and short term investments

Question 2

If equipment is planned to be sold during the current period does it move to current assets?

Answer 2

No

Question 3

The relationship between NI and RE is similar to the relationship between comprehensive income and ……

Answer 3

Accumulated OCI

Question 4

When will no foreign exchange transaction gain or loss be needed?

Answer 4

The transition is denominated in US dollars

Question 5

A material transaction that is infrequent in occurrence or unusual in nature should be presented….

Answer 5

As a separate component of “income from continuing operations”

Question 6

The minimum operating cycle for purposes of reporting a prepaid current asset is-

Answer 6

One year or 12 months

Question 7

Where is an unrealized loss of AFS debt securities captured?

And an unrealized gain captured?

Answer 7

Loss captured in net income

Gain in OCI

Question 8

Foreign transaction gains/losses go to the ….

Foreign translation gains/losses go to the….

Answer 8

Foreign transaction go to the income statement

Foreign translation go to OCI

Question 9

How is goodwill calculated?

Answer 9

As the excess of the purchase price over the fair value of the net assets purchased

Question 10

When a sale of equipment happens and you are computing investing cash flows, how is it calculated?

Answer 10

When equipment is sold at a gain, the cash flow includes the carrying amount plus the gain.

Question 11

When is gain or loss calculated for the cost method for treasury stock?

Answer 11

Gain or loss is calculated upon reissue

Question 12

How should a tax deduction item that the company expects to be disallowed be handled?

Answer 12

As a after tax income tax expense and a liability for an unrecognized tax benefit

Question 13

When is gain or loss calculated for the par value method for treasury stock?

Answer 13

Gain or loss is calculated immediately upon repurchase

Question 14

Par value method steps when you repurchase stock (treasury stock)

Answer 14

1 calculate gain or loss: original selling price - repurchase price

2 Reverse original entry for shares repurchased: debit treasury stock at par

3 credit cash paid

Question 15

When a property dividend is declared and the market value of the property exceeds its book value the excess-

Answer 15

Increases net income for the period

A property dividend is recorded at the fair value of the property to be distributed. The property has to be adjusted to fair value with the adjustment affecting earnings for the period.

Question 16

What is the current ratio

Answer 16

Current Assets/Current Liabilities

Question 17

Comprehensive income excludes changes in equity resulting from…..

Answer 17

Dividends paid to stockholders- Changes from owner investments and distributions to owners

Question 18

What is the quick ratio

Answer 18

Assets/liabilities
It’s only the most liquid assets(cash, AR, market securities)
By current liabilities

Question 19

What is AR turnover ratio

Answer 19

Net credit sales/Avg AR

Question 20

Inventory turnover ratio

Answer 20

COGS/Avg Inventory

COGS=Beginning inventory +purchases-Ending inventory

Question 21

Accounts payable turnover ratio

Answer 21

Total purchases/Ang accounts payable

Question 22

How to calculate ending inventory?

Answer 22

Beginning inventory
Add purchases
Less COGS
=ending inventory

Question 23

What is the most difficult characteristic for governmental entity to report?

Answer 23

Relevance

Question 24

NFP corp are required to produce the following financial statements

Answer 24

Statement of financial position
Statement of activities
Statement of cash flows

Question 25

What are the governmental funds?

Answer 25

General Special revenue Debt service Capital project Permanent

Question 26

What are the proprietary funds

Answer 26

Enterprise Internal service

Question 27

What are the fiduciary funds

Answer 27

Pension trust Investment trust Private purpose trust Custodial

Question 28

Governmental funds use what accounting basis and measurement focus?

Answer 28

Modified accrual basis and current financial resources focus

Question 29

Proprietary and fiduciary funds are what basis of accounting and measurement focus?

Answer 29

Accrual basis and economic resources focus

Question 30

Government wide financial statements use what basis of accounting and measurement focus?

Answer 30

Accrual basis and economic resources

Question 31

What is pledging

Answer 31

Pledging receivables is using them as collateral without transferring ownership. JE is debit Cash credit Notes payable

Question 32

Name complete list of financial statements

Answer 32

Income statement Statement of comprehensive income Balance sheet Statement of SE Statement of cash flows Notes to financial statements

Question 33

What is JE for factoring receivables without recourse

Answer 33

Trade receivables Credit loss expense Cash Gain in factoring Allowance for credit losses

Question 34

How to calculate depletion expense?

Answer 34

Depletion base= purchase price+development costs+estimated restoration costs-expected salvage value costs Then divide by total extractable resources then multiply by the resources extracted in a year

Question 35

Accrued compensated absences generally includes

Answer 35

Vacation pay but not sick pay

Question 36

Total tax expense is the combination of?

Answer 36

Current tax plus or minus deferred taxes

Question 37

With permanent differences are there deferred taxes?

Answer 37

No

Question 38

What are examples of permanent differences?

Answer 38

Tax exempt interest income - municipal, state Tax exempt Life insurance on officers key person policy Non deductible life insurance premiums when corporations is the beneficiary Non deductible certain penalties, fines, bribes, kickbacks Non deductible portion of meal and entertainment expenses Tax exempt dividend received deduction Non deductible excess percentage depletion over cost depletion

Question 39

What’s the minimum operating cycle for purposes of reporting a prepaid current asset?

Answer 39

12 months

Question 40

Bad debt expense formula

Answer 40

Bad debt expense= Required ending allowance-(beginning allowance-accounts written off+accounts recovered)

Question 41

What is the formula for allowance for doubtful accounts?

Answer 41

Beginning balance for allowance for doubtful accounts Plus bad debt expense Minus accounts written off Plus accounts recovered Equals allowance for doubtful accounts

Question 42

X company is buying products in Yen. If the Yen depreciates versus the Dollar, X company will-

Answer 42

Will cause a loss for X company

Question 43

Income statement is REGL

Answer 43

RE effect the operating side of the business and GL are non operational side of the business reported at net amounts

Question 44

Unexpired cost are on the balance sheet as assets then are later expensed as expired costs on the income statement. Provide examples-

Answer 44

Inventory-COGS Unexpired costs of insurance-insurance expense Net book value of fixed assets-depreciation expense Unexpired cost of patent-amortization of patent expense

Question 45

Income from continuing operations equals-

Answer 45

Operating income (RE) + non operating income (GL)

Question 46

Deferred tax assets and liabilities are

Answer 46

Classified as non current

Question 47

The approach in us gaap to determine income tax expense is

Answer 47

Asset and liability approach

Question 48

Key points about DO-

Answer 48

-Reported separately on the IS -Comes after income from continuing operations in the IS -Reported net of tax

Question 49

The amount of capitalized interest during construction is based on…

Answer 49

The weighted avg amt of accumulated expenditures

Question 50

What are 3 things to consider when presented w a DO question-

Answer 50

-Impairment loss (to be written down) -Results of operations (to be moved down due to discontinuance) -Gain or Loss on sale (report in period in which it occurred You can disclose in the face of the financial statements or in the notes

Question 51

All treasury stock transactions-

Answer 51

Decrease total equity

Question 52

Acquisition of TS at a price less than their book value-

Answer 52

-Increase book value per share -Book value is based on the number of outstanding common shares which is reduced by the acquisition of TS. The numerator (book value) is also reduced but the overall effect of the ratio is an increase in book value per share.

Question 53

A change from FIFO to LIFO is at change in accounting-

Answer 53

Principle but handled prospectively

Question 54

Revenues, liabilities and equity increase with a-

Answer 54

Credit

Question 55

Under us gaap subsequent reversal of intangible asset impairment losses is…

Answer 55

Prohibited unless intangible asset is held for disposal