FAR 2 Flashcards by Samrithi Suresh

Loss contingencies

Accrue if probable and estimable, disclose if reasonable possible

How well did you know this?

Not at all

Perfectly

Gain contingencies

Recognised only when realised, disclose if probable and estimatable

How well did you know this?

Not at all

Perfectly

Bonds payable

Non current liability

How well did you know this?

Not at all

Perfectly

Treasury stocks

Contra equity

How well did you know this?

Not at all

Perfectly

Sales discount

Contra revenue

How well did you know this?

Not at all

Perfectly

Allowance for credit loss

Contra asset

How well did you know this?

Not at all

Perfectly

Purchase is registered when ownership and title of goods are transferred from seller to buyer. In case of issue in purchase order

There is no transfer of title and need not to disclose and accrue

How well did you know this?

Not at all

Perfectly

If the loss is reasonably possible

Disclose it

How well did you know this?

Not at all

Perfectly

Current asset

Cash
Receivables
Short term investment
Inventories
Prepaid for expenses

How well did you know this?

Not at all

Perfectly

Non current assets

Long term investment
Property plant and equipment
Goodwill

How well did you know this?

Not at all

Perfectly

Current liability

Accounts payable
Short term debts
Contingent liability

How well did you know this?

Not at all

Perfectly

Non current liability

Long term debt
Other liabilities
Deferred long term liability

How well did you know this?

Not at all

Perfectly

Stockholders equity

Common stock
Retained earrings
Treasury stock
Capital surplus
Other stockholder equity

How well did you know this?

Not at all

Perfectly

Remote in loss or gain

No need to disclose or accrue

How well did you know this?

Not at all

Perfectly

In a rising price which will have a higher ending inventory method

FIFO

How well did you know this?

Not at all

Perfectly

Change in tax is the

Cash flow

How well did you know this?

Not at all

Perfectly

LIFO reserve

Convert LIFO to FIFO

How well did you know this?

Not at all

Perfectly

Working capital

Current assets - current liability

How well did you know this?

Not at all

Perfectly

Cash conversion cycle

Inventory conversion period + receivable collection period - payable deferred period

How well did you know this?

Not at all

Perfectly

BRS TYPE A

Reconcile item in bank books
- outstanding checks
- deposit transit
- bank errors

How well did you know this?

Not at all

Perfectly

BRS TYPE B

Change is cash book
- Non sufficient fund
- unrecorded bank charges
- unrecorder bank collections
- cash account error

How well did you know this?

Not at all

Perfectly

Account receivable

Trade receivables

How well did you know this?

Not at all

Perfectly

Bad debts is referred as

Credit loss

How well did you know this?

Not at all

Perfectly

Sale with recourse

Factor does not assume the risk of uncollectible

I.e factor has no recourse
It does bear the credit loss expense

How well did you know this?

Not at all

Perfectly

Sales without recourse

Factor assumes the risk of uncollectible No recourse it bears the credit loss expense

Quick ratio =

Cash+ receivables+marketable securities / current liabilities

Receivables turnover =

Net credit sales / average net receivables

Inventory turnover =

COGS / average inventory

Inventory conversion period =

Average inventory /Cogs per day

Receivable collection period =

Average receivables / credit sales per day

Accounts payable deferral period =

Average payables / credit purchase per day

Generally investment with an original maturity of ———- from the purchase date are classified as cash equivalent

3 months or less

A/R account analysis ( t format)

Beginning balance + credit sales or credit loss - cash collected or credit loss = ending balance a/r

Uncollectible a/r direct write -off method

Non - gaap method for tax purposes J/e Credit loss A/r A/r at gross face value on b/s

Uncollectible a/r GAAP METHOD

1. Sales percentages method 2. Aging of a/r A/r at NRV on b/s = a/r less allowance

Sales percentage method =

Credit sales * estimate of uncollectible % of credit sales

Aging of a/r method =

Outstanding a/r * estimate of uncollectible % of a/r

Direct method - non gaap a/r Credit loss recovery j/e

A/r Bad debts

Cash collected - direct non gaap

Cash A/r

GAAP method a/r credit loss recovery

A/r allowance

Types of transfers of financial assets

1. Pledging - secured borrowings 2. Assigning - agree to use the proceeds from the assets 3. Factoring - selling to a factor

Transfer is accounted for as Sale as

Control is surrender

Transfer are accounted for a borrowings

Secured loan with control not surrender

Periodic inventory system

Inventory quantity determined periodically by physical count usually at year end

Perpetual inventory system

Inventory quantity updated perpetually on an ongoing basis usually real time It is online real time

Fob shipping point

When good are delivered by seller to the common carrier(shipping), title will passes from seller to buyer

Fob destination

When goods are received by the buyer (reached destination), tilte passes from seller to buyer

Consignment sales

Title remains with the consignor until goods are sold by the consignee, thus the title passes forest to the third party buyer at point of sale

Inventory costing methods

Lower of cost or market

Average cost method - periodic

Weighted average

Average cost - perpetual

Moving average method

Weighted average price =

Cost of goods available for sale / no. Of units available for sale

First in first out

LISH - last in still Here

Last in first out

FISH - first in is still here

FIFO effects

I/s is not ok , b/s is ok

LIFO effect

I/s is ok , b/s is not ok

Inventory valuation

LCM OR LCNRV

LCM

Lower if cost or market - lifo

LCNRV

Lower of cost or NRV- fifo method

NRV =

Net selling price - cost to complete

Ceiling is

NRV

Floor is

NRV - normal profit margin

Replacement cost is

Cost to purchase or reproduce

Long term construction contract

Percentage of completion method and completed contract method

Gross profit recognised under percentage if completion

In each period

Gross profit recognised under completed contract method

Only on the completion of the contract