FAR Flashcards
An ________ is a liability that represents an expense that has been recognized but not yet paid. A_________ is an asset that represents a prepayment of future expenses that have not yet been incurred.
accrued expense, deferred expense
SFAC 5 states that “Relevance is a primary qualitative characteristic. To be relevant, information about an item must have ______ value or ______ value (or both) for users and must be timely.”
feedback, predictive
_______ is the process of formally recording or incorporating an item into the financial statements of an entity as an asset, liability, revenue, expense, or the like.
Recognition
_______ is the process of converting noncash resources and rights into cash or claims to cash.
Realization
________, including consistency, is an enhancing quality that interacts with relevance and faithful representation to contribute to the usefulness of information.
Comparability
Comprehensive income is a broad measure of the effects of transactions and other events on an entity, comprising all recognized changes in equity (net assets) of the entity during a period from transactions and other events and circumstances except those resulting from __________.”
investments by owners and distributions to owners
_________ as “the amount of cash, or its equivalent, that could be obtained by selling an asset in orderly liquidation.”
current market value
______ is a measure of performance during a period that is concerned primarily with the extent to which asset inflows associated with cash-to-cash cycles substantially completed (or completed) during the period exceed (or are less than) asset outflows associated, directly or indirectly, with the same cycles.
Earnings
The term reliability is no longer part of the conceptual framework. ________ is now used to capture completeness, neutrality, and free from material error.
Faithful representation
The financial statements provide a wealth of information about the performance and financial position of the_______ , but they do not directly allow an evaluation of ______.
enterprise, management
Relevance can be broken down into _____ value and _____value.
predictive, confirmatory
Faithful representation can be broken down into ______, ______and______.
completeness, freedom from material error, and neutrality
______ is an example of an exit price. It equals the estimated selling price less the cost to complete and sell.
Net realizable value
Consolidated financial statements are an example of trying to account for the _______ that comprises more than one legal entity.
economic entity
The use of _______ valuation places upper (“ceiling”) and lower (“floor”) limits on the measurement of “market” that may not result in a true fair value measurement. Thus, the measurement of ______ at “market” is one of the few exceptions to the use of ASC 820 guidance for fair value measurement.
lower of cost or market, inventory
The main pronouncements published by the SEC are the _________ and the ________.
Financial Reporting Releases (FRR),
Staff Accounting Bulletins (SAB)
The ________ oversees the compliance with the securities acts and examines all filings made by publicly held companies.
Division of Corporate Finance
The ________ completes the investigation and takes appropriate actions when there is a violation of a securities law.
Division of Enforcement
The ________ oversees the secondary markets, exchanges, brokers, and dealers.
Division of Trading and Markets
The _________ oversees the investment advisers and investment companies under the Investment Company Act of 1940 and the Investment Advisers Act of 1940.
Division of Investment Management
A company that is a large accelerated filer must file its Form 10-Q with the United States Securities and Exchange Commission within how many days after the end of the period?
40 days.
Beginning in 20X6 the SEC changed the 10-K filing deadline for large accelerated filers to be _____ days from the fiscal year end. Accelerated filers still have____ days to file their 10-K.
60, 75
Regulation _____ governs the form and content of non-financial statement disclosures.
S-K
Regulation _____ governs the form and content of financial statements and financial statement disclosures.
S-X
The change from LIFO to FIFO is an accounting principle change which therefore does not affect current period income. It is reported as a direct adjustment to the beginning ___________.
retained earnings balance.
Net Income +________ = Comprehensive Income
Other Comprehensive Income
For trading securities, the changes in value are recorded in ________. However, for available-for-sale securities the changes in value go into a special account, which is called “unrealized gain/loss in __________”, which is located in _________.
operating income, other comprehensive income, stockholders’ equity
a three-month U.S. Treasury bill meets the definition of a ___________. Three months is the maximum original ________ under the definition.
cash equivalent, maturity
_______ is not disclosed in a cash flow statement. It is a specifically prohibited disclosure under GAAP. The FASB did not want it to be confused with earnings per share.
Cash flow per share
All interest payments are defined as _______cash flows, in part, because they affect income.
operating
_______ method, reconciles from net income to cash provided by operating activities.
Indirect
_______ method, reports all cash receipts and cash payments from operating activities.
Direct
Although the indirect method does not report operating cash flows in the body of the statement, _______ and _______ must be disclosed in the notes or supplementary schedule.
income taxes paid, interest payments
Companies use S-T investments to park surplus cash. When such investments are classified as _______, cash use in their purchase and proceeds provided from their sale are included in _______ cash flow.
trading securities, operating
Defensive Interval Ratio =
Quick Assets/Daily Cash Expenses
Dividend payout ratio =
common dividends/net income
When the cash basis or the modified cash basis of accounting is used, the title Income Statement, which is appropriate when the accrual basis of accounting is used, should be replaced by the title ___________. This helps distinguish that the statement is not based on full accrual accounting consistent with U.S. GAAP.
Statement of Cash Receipts and Cash Disbursements
A ________ (_____) is always included in a set of personal financial statements, and a Statement of Changes in ________ may be included, but is not required.
Statement of Financial Condition (Balance Sheet), Net Worth
The ________ sets standards for private companies by weighing the relevance of the information versus the cost benefit.
Private Company Council (PCC)
________ is focused on informing the financial statement users that liquidation is imminent.
Liquidation basis of accounting
_________ annually review the strategy of the IFRS Foundation and the IASB and its effectiveness, including the consideration, but not the determination, of the IASB’s agenda.
The trustees of the IFRS foundation
There are two assumptions underlying the preparation and presentation of financial statements: _______ and _______.
accrual basis, going concern
Under IFRS for SMEs, either the cost method or equity method may be used by an investor to account for an investment in another entity (called an “associate” in IFRS for SMEs) over which the investor has__________.
significant influence
Under IFRS for SMEs, the _______ and _______ assumptions of cost flow may be used for inventory valuation purposes, but the _______ cost flow assumption may not be used.
FIFO, weighted average cost,
LIFO
Are the following items cash equivalent?
- Treasury Bill
- Treasury Stock
- Trading Securities
- yes
- no
- no
Freight-out is a ______ expense. It is not inventoried because the goods have reached ______ condition before incurring this cost. Only costs that contribute to preparing ____________ are inventoried.
delivery, salable, inventory for sale
In a period of rising prices, a liquidation of older inventory, which carries lower costs, will result in a ______ in the cost of goods sold and _____ profits.
decline, higher
This method most closely matches the physical flow of inventory.
FIFO
Average cost must be calculated each time additional inventory is purchased.
Moving-average
U.S. GAAP defines NRV the same as IFRS. However, U.S. GAAP uses NRV to determine a ______ and ______when determining market value.
floor, ceiling
The criterion for capitalizing post-acquisition costs is not whether the market value of the overall asset is increased. Rather, the criteria are (1) increase in ______ or (2) increase in ______or ______including cost reduction.
useful life, productivity or efficiency
______ is not subtracted when computing depreciation for DDB
salvage value
the best association of terms in the natural resources accounting area with the conceptual framework.
Successful efforts method-definition of asset
Recovery of impairment losses is _______under U.S. GAAP.
prohibited
Long-lived assets need to be tested for impairment when facts or circumstances indicate that the __________.
carrying amount may not be recoverable.
If an asset is held for _______, previous losses can be recovered. The logic is that the recovery will be realized in the near future if the asset is in the process of being _______.
disposal, disposed
According to IFRS the recoverable amount is the ________ of fair value less cost to sell or value in use (discounted cash flow).
greater
IFRS does not permit “cherry picking” which assets are remeasured within each class of assets. When an asset is revalued,_________ of property, plant, and equipment to which that asset belongs must be revalued.
the entire class
In the absence of other relevant factors, an investor is considered to have significant influence over an investee if it owns _____ -_____ of the voting securities of the investee.
20% - 50%
Redeemable preferred stock ________ an equity security for investment accounting purposes. Redeemable preferred stock = callable preferred stock
is not considered
An investor MAY elect to use _____ to account for or measure some investments that otherwise would be accounted for using amortized cost or the equity method
fair value
Premature sale of held-to-maturity securities are considered at maturity if either (1) the sale occurs so ________ that interest rate risk is virtually eliminated, or (2) the sale occurs after at least _____% of the principal has been collected.
close to maturity, 85%
The LCM method is no longer applicable to investments. Investments in available-for-sale securities are reported at _______ under the fair value method.
market value
Under IFRS, debt securities, changes in fair value may be reported in profit/loss or in other comprehensive income, depending on whether or not the investment is ________or not.
held for trading purposes
Under IFRS, Only investments in ______securities may be transferred between categories.
debt
Under IFRS, When investments are transferred between categories, financial statements of prior periods presented for comparative purposes must be restated (Statement II). True/False??
True
An investment in the debt of another entity _________ the investor an ownership interest or the right to vote in corporate elections.
does not give
Goodwill resulting from an investment in another entity (i.e., the excess of the cost of the investment over the investor’s share of the fair value of the investee’s identifiable assets) _______ amortized.
is not
Under IFRS, the fair value option can only be applied by certain investors such as _______, _______ or ______.
venture capitalist, mutual funds or unit trusts
The life assigned to the intangible asset is the shorter of its ______and ______life.
legal, useful
