FAR Deck 1

Question 1

What criterion must be true for an asset to be classified as held for sale?

Answer 1

-Must be ready for immediate sale
-Must be actively marketed
-Management must have committed to a plan to
sell
-Sale of the asset must be probable and must
be completed within one year
-An active program to sell the asset has been
initiated
-And it is unlikely that the plan to sell will be
withdrawn.

Question 2

What is the primary way of communicating financial information to people outside of an entity?

Answer 2

Financial statements

Question 3

Those costs that an entity would not have incurred if the lease had not been entered into (i.e. commissions and payments made to current tenants to obtain the lease) are called ____________.

Answer 3

Indirect costs (IDC)

Question 4

IDC are __________ into the lease asset

Answer 4

Capitalized

Question 5

When is the gain on disposal of a discontinued segment recognized?

Answer 5

When the sale actually happens.

Question 6

Disclosures on operating leases include _______________ on an annual basis for the first 5 years and ____________ for the remaining years.

Answer 6

The undiscounted cash flows
the total amounts

Question 7

In an operating lease is the amortization component the same every year?

Answer 7

No.

Question 8

The amortization on an operating lease is the difference between ___________ and the ___________.

Answer 8

lease expense
interest expense

Question 9

The recovery of costs is included in what concept?

Answer 9

Capital maintenance concept

Question 10

What capital maintenance concept is defined as - The effects of price changes on assets and liabilities are recognized as holding gains and losses and are included in return ON capital

Answer 10

Financial Capital concept

Question 11

What is the physical capital concept?

Answer 11

The effect of price changes are recognized as a capital maintenance adjustment as part of equity. This is not included in return ON capital.

Question 12

What is the purpose of comprehensive income?

Answer 12

To summarize all changes in equity from NONowner sources.

Question 13

What financial statement is OCI reported in?

Answer 13

Statement of financial position

Question 14

How are unconditional promises to give to an NFP reported?

Answer 14

They are reported as a current liability at PV and the income is recognized in the year promised.

Question 15

What funds use the full accrual method of accounting?

Answer 15

Proprietary funds (enterprise funds and internal service funds) and fiduciary funds

Question 16

When should the cost of termination benefits be recorded?

Answer 16

The cost of on-time termination benefits should be recorded on the communication date.

Question 17

What gets reported as supplemental disclosures on the statement of cash flows?

Answer 17

Income taxes paid and net interest payments

Question 18

What is the value of the lease asset in a finance lease?

Answer 18

PV of payments plus the PV of purchase option

Question 19

How are operating lease payments reported?

Answer 19

As rent expense (no separate interest component)

Question 20

Should cash flow per share be reported on financial statements

Answer 20

No

Question 21

How is a lease modification accounted for

Answer 21

It is considered a new lease if the lease grants the lessee an additional right of use prices at its standalone market price

Question 22

What qualifies as initial direct costs?

Answer 22

Only incremental costs

Question 23

How is a change in reporting entity reported on the financial statements

Answer 23

Retrospective

Question 24

How are retained earnings of a business combination reported on the consolidated financial statements?

Answer 24

Only the parent company’s retained earnings are shown.

Question 25

What funds are classified as governmental funds?

Answer 25

General Fund Capital Projects Fund Special Revenue Fund Permanent Fund

Question 26

What basis of accounting do Governmental funds use?

Answer 26

Modified Accrual

Question 27

What basis of accounting do proprietary funds and fiduciary funds use?

Answer 27

Accrual

Question 28

Are prepaid expenses ALWAYS allocated between or amount accounting periods?

Answer 28

No. They may also be accounted for as expenditures in the period of acquisition.

Question 29

How many days after the end of a quarter is Form 10-Q due to the SEC?

Answer 29

40

Question 30

What are the three categories of filers with the SEC?

Answer 30

Small (non-accelarate) = under $75M Accelerated filers = between $75M and $700M Large accelerated filers = over $700M

Question 31

EPS must be presented on the face of the income statement for _________ and ___________.

Answer 31

Income from continuing operations Net income

Question 32

What is the ratio that measures the price investors are willing to pay for each dollar of earnings the company generates?

Answer 32

Price-Earnings ratio

Question 33

What is the ratio for return on assets

Answer 33

Return on equity X (1-debt to equity ratio)

Question 34

What is fixed asset turnover ratio

Answer 34

Sales/Assets

Question 35

What is asset turnover ratio

Answer 35

Sales/Total Assets

Question 37

Does a company recognize gain or loss on treasury stock transactions?

Answer 37

No

Question 38

When should a long lived asset be written down

Answer 38

When the sum of the undiscounted cash flows is less than the carrying value

Question 39

Are start up costs expensed or capitalized?

Answer 39

Expensed

Question 40

Dividends that exceed the balance of retained earnings are called ________.

Answer 40

Liquidating dividends

Question 41

Is salvage value factored in when using double declining balance?

Answer 41

No

Question 42

Debenture bonds are ____________ debt

Answer 42

Unsecured