FAR 2.1 Flashcards

1
Q

Notes to the F/S’s

Note A or B is usually the…, and includes…

A

Summary of Significant Accounting Policies - these usually do not include numbers, and should disclose policies

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2
Q

Mgmt is required to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern for…

A

A reasonable period of time not to exceed one year beyond the date the financial statements are issued

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3
Q

Major difference b/t US GAAP and IFRS relating to Going Concern and the liquidation basis of accounting…

A

IFRS does not offer guidance on this basis of accounting

GAAP does provide specific guidance about preparing financial statements when liquidation is imminent

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4
Q

Subsequent evaluation period and disclosures for

SEC filers and non-SEC filers

A

SEC filers responsible for events up to issuance date, but not required to disclose the actual date

Non-SEC filers responsible for events up until GAAP approvals have been made, and also REQUIRED to disclose the actual date of responsibility

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5
Q

Fair value measurement

Measurement for Held-to-maturity assets, and what is the Level Input?

A

Amortized cost

Level input is N/A

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6
Q

FV measurement

How to measure foreign currency exchanges, and what Level Input?

A

Fair Value Method, and Level 2 if based on observable inputs

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7
Q

FV Measurement: When there is no active market, how do you find the fair value of an asset when given the quoted price, and transaction cost?

How is the “principal” market determined?

A

Determine the most advantageous price by netting the fair value and transaction. The fair value is then JUST the quoted price, NOT including the transaction cost.

“Principal” market is the market with the greatest volume of activity

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8
Q

A change from the cost approach to the market approach is a change in… and considered what type of accounting change?

A

change in valuation technique, and is a change in accounting estimate

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9
Q

Segment reporting

What are the requirements?

A

10% of Revenue (internal/external, all operating segments), Profits, Assets
&
75% of total EXTERNAL (consolidated) REVENUE being reported

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10
Q

Segment reporting

How to report Profits and Losses

A

Need to use the absolute amounts of the GREATER of;

1) The combined reported profits of all operating segments that DID NOT report a loss
2) The combined reported loss of all operating segments that DID report a loss

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11
Q
SEC Reporting:
10K
10Q
11K
8K
Forms 3,4,5
20F
40F
6K
A

10K - annual F/S - audited
10Q - quarterly F/S - reviewed
11K - pension plans
8K - major corporate events
Forms 3,4,5 - stock ownership transactions
20F annual report of non-US registrant - audited
40F - annually by Canadian companies - audited
6K - semiannually by foreign private issuers - unaudited

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12
Q

10k for accelerated filers - size and days (annual and quarter)

10k for large accelerated filers - size and days

A

75 million and 75 days annual, 45 days quarter

700 million and 60 days annual, 40 days quarter

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13
Q

which F/S for OCBOA method is NOT required?

A

statement of cash flows

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14
Q

Approach for converting cash-basis to accrual-basis

A

Add increases in current assets
Subtract decreases in current assets

Add decreases in current liabilities
Subtract increases in current liabilities

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15
Q

Acid-test (quick ratio)

A

current liabilities

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16
Q

AR Turnover ratio

A

net credit sales / avg net receivables

17
Q

Inv turnover ratio

A

COGS / avg inventory

18
Q

Operating cycle

A

AR turnover in days + inventory turnover

19
Q

cash conversion cycle

A

AR turnover days + inv turnover days - A/P turnover days

20
Q

accounts payable turnover

A

COGS / a/p

21
Q

return on common equity

A

net income - preferred divs / avg common equity

22
Q

times interest earned

A

EBIT / Interest exp

23
Q

Partnerships: Exact Method

A

The incoming partners capital account is their actual contribution (you must calculate)

No adj to existing partners capital req’d

24
Q

Partnerships: Bonus Method

A

BALANCE in total capital accts controls the computation

Incoming partner’s capital account is their percentage of the partnership total NBV (after their contribution)

Then adjust existing partners capital to balance

25
Q

Partnerships: Goodwill method

A

GOING in investment (dollars) controls the computation

Incoming partners capital acct is their ACTUAL contribution

26
Q

Subsequent events: Loss on a building, how much can you write off in the year of the loss if the cost of replacement will NOT occur until the next year?

A

Can only w/o the carrying value in the current year.

27
Q

Bonds held to maturity are valued at?

A

Amortized cost

Note that a fair value given in this type of question could be a distractor.