FAR Financial Statements Flashcards

1
Q

Which Personal Financial Statements are required?

A

Statement of Financial Condition & Statement of Changes in Net Worth

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2
Q

How are assets and liabilities valued in a Personal Financial Statement?

A

Estimated current value

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3
Q

How are estimated taxes that would be paid if all assets were converted into cash and all liabilities paid presented on a Personal Financial Statement?

A

Presented on Statement of Financial Condition between Liabilities and Net Worth

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4
Q

What is the general presentation on a statement of financial condition?

A

Assets
- Liabilities
- Estimated taxes on assets sold
: Net Worth

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5
Q

How is life insurance presented on a Personal Financial Statement?

A

Only shown if there is cash surrender value

It is shown net of loans against the policy

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6
Q

How are business interests shown on a Personal Financial Statement?

A

Business Interests that constitute a large percentage of total assets should be separated from other investments

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7
Q

What is the discreet view in an Interim Financial Statement?

A

Interim period is a separate accounting period - not GAAP

Same accounting principles used for annual reporting should be used.

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8
Q

What is the integral view in an Interim Financial Statement?

A

Interim period is a part of the annual period - GAAP

Gross profit method may be used to estimate COGS and inventory

Temporary declines in inventory aren’t recognized

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9
Q

How are discontinued operations & extraordinary items reported in Interim Financial Statements?

A

Aren’t prorated

Fully recognized in Interim Period as incurred

If it occurs in Q3 - it’s recognized in Q3

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10
Q

How are cumulative gains and losses reported in Interim Financials?

A

Reported as if they occurred in the first quarter

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11
Q

How is inventory valuation handled in Interim Financials?

A

If inventory experiences a decline in value during an interim period - the loss is recognized in the interim period

If the loss is expected to be only temporary - no loss is recognized

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12
Q

What is one of the primary problems with interim reporting?

A

The matching principle gets messed up - Expenses incurred in one period may benefit future periods

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13
Q

For whom is Segment Reporting required?

A

Publicly traded companies

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14
Q

What factors cause a segment to be significant and therefore to be reported separately?

A

Revenue of segment is 10% or more of total

Profit is 10% or more of total

Segment assets are 10% or more of total

75% Test - All segment revenues must equal 75% of total external revenues

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15
Q

What is the disclosure requirement regarding sales of 10% or more for one customer?

A

If 10% or more of enterprise revenue comes from one customer - the segment making the sales must be disclosed

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