FAR Deck 1 Flashcards
(30 cards)
Are disclosures of accounting policies important for financial statements?
Disclosures are an INTEGRAL part of financial statements
What are the disclosure requirements related to risk and uncertainties under GAAP?
Significant estimates are disclosed when it is reasonably possible (NOT PROBABLE) that estimates will change in the near term and that the effect will be MATERIAL. Immaterial items are not disclosed
Customer A contributes 40% of sales and Customer B contributes 30% of sales. Is this relevant and should this information be disclosed in the notes to financial statements?
Yes this is significant due to these two customers being a large portion of the sales volume. This increases the risk of loss and info stating these facts should be included in the notes to financial statements.
Describe Form 10-Q?
The 10Q is a QTRLY report
The 10Q must contain review of interim financial info by a CPA
Large Corp: Filed within 4 Days
Small Corp: Filed within 45 Days
Done at the end of the first 3 quarters of the fiscal YR
Describe REG-S/X?
Reg S/X sets forth the form, content and requirements for interim financial statements(interim is period of less than one year)
Describe the Form 10-K?
Must be filed annually by US registered companies
Large Accelerated Filers: 60 Days after fiscal YE
Accelerated Filers: 75 Days after fiscal YE
All Others: 90 Days after fiscal YE
Contains: Financial dislosures, summary financial data, MD&A, audited FS prepared using GAAP
What is an Large Accelerated Filer VS Accelerated Filer?
Large is a Filer with a worldwide market value of outstanding common equity held by non affiliates of $700M or more
Normal is a filer with a worldwide market value of outstanding common equity held by non affiliated of $75M or more but less that $700M
Describe form SEC 10-Q?
SEC 10-Q is filed quarterly by US registered companies.
Large Accelerated Filers- 40 Days after end of fiscal qtr
Accelerated Filers and all others- 45 days after end of fiscal qtr. THIS FORM CONTAINS UNAUDITED F/S prepared using US GAAP, interim period MD&A and certain disclosures
Describe form 8-K?
Form 8-K is filed to report major corporate events. Corporate asset aquisition or disposal, changes in security and trading markets, changes in accountants, f/s, and changes in corp governance and management.
Describe XBRL?
“Extensive Business Reporting Language”- US public companies and foreign private issuers that use GAAP as well as private foreign issuers that use IFRS must present financial statements and any applicapable financial statement schedules in a exhibit prepared using XBRL. This exhibit is required with the filers SEC registration statements, qtrly and annual reports, and reports 6-K and 8-K contained revised or updated f/s
Describe Forms 3,4, and 5?
Forms 3,4,and 5 are required to be filed by directors, officers, or benefical owners of more than 10% of a class of equity securities of a registered company.
Describe form 6-k?
The 6-K is filed semiannually by foreign private issuers. This form is similar to form 10-Q and contains unaudited financial statements, interim period MD&A, and certain disclosures.
What should be includes in a companies computation of annual income tax rates?
A Companies Computation of annual income tax rates should include the following:
- Reflect Foreign Tax Rates
- Offer Available Tax planning alternatives
- Effects of other anticipated tax credits
- Capital Gain rates
- Foreign Tax Credits
What is the % of completion revenue method?
In the completion revenue method the revenue is based on the completion of the project and booked based on completion. Price (-)Cumulative Actual Cost (-)Est Remaining Cost (=) Est Total Gross Profit (x) % of completion
What is the completed contract method?
The completed contract method means revenue is not recognized until the job is completed. However when using this method losses are recognized when they occur.
Are changes in reporting entities dealt with prospectively or retrospectively?
If comparative financial statements are presented a change in accounting entity should be reports retrospectively and all previous F/S should be restated
How do you calculate Working Capital and Working Capital Turnover?
Current Assets
(-) Current Liabilities
(=) Working Capital
Working Capital Turnover
Sales
(/) Working Capital
What are the steps to liquidating a partnership?
- Sell Assets for Cash
- Use cash to payoff any short term debt
- Calculate any losses on sale and allocate to partners
- Reduce any partner balances by their specific liabilities
- Allocate remaining cash based of % to the partners
How do you calculate Additional Paid in Capital?
Assets (At Fair Value)
(-) Liabilities (At Fair Value)
(-) Common Stock
= Additional Paid in Capital
In forming a partnership how should tangible assets be recorded?
Partnership tangible assets should be recorded using market value not fair value
Working Capital Formula?
Current Assets
(-) Current Liabilities
= Working Capital
Current Ratio Formula?
Current Assets
/ Current Liabilities
Cash Ratio Formula?
Cash + Cash Equivalents + Mkt Securities
/ Current Liabilities
Calculate AR Turnover?
Net credit Sales
/ Avg Net Receivables
