Brainscape's Knowledge GenomeTM


Top Flashcards (Certified)
All Flashcards

CPA > FAR4 > Flashcards

FAR4 Flashcards

(68 cards)

Start Studying
1
Q

Current Assets

A

Those resources that are reasonably expected to be realized in cash, sold, or consumed (prepaid items) during the normal operating cycle of a business or one year (whichever or longer)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

Cash surrender value of life insurance

A

Can be either current or non-current asset depending on intent. If the policy owner intents to surrender the policy for its cash surrender value during the normal operating cycle it will be a current asset

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

Current Liabilities

A

Are obligations expected to be required to cover expenditures within the year

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

Refinanced Short-Term Obligations

A

A short-term obligation may be excluded from current liabilities and included in noncurrent debt if = intent and ability to refinance long term (can’t under IFRS - must wait)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

Cash and Cash Equivalents

A

Original maturity of 90 days or less

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

Cash and Cash Equivalents vs. not for Compensating Balances

A

yes - if not legally restricted

no - if legally restricted

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

Bank Reconciliation, per Bank

A

(+) Deposits in Transit

(-) Outstanding Checks

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

Bank Reconciliation, per Books

A

(+) Bank Collections, Interest Income

-) Service Charges, Non-sufficient Funds (NSF

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

Accounts Receivable

A

Beginning Balance
(+) Credit Sales
(-) written off, convert to note, cash collected
= Ending Balance (NRV)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

Gross Method Discounts

A

Records a sale without regard to the discount.

Payment received within the discount period, a DR: sale discount account (contra revenue)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

Net Method Discounts

A

Records sales and A/R net of the discount.

Payment received after the discount period, a CR: sales discount NOT taken account (rev)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

Trade Discounts

A

Sales revenue and A/R are recorded net of trade discounts. Applied sequentially

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

Direct Write-Off Method

A

Not GAAP, used for tax purposes (does not properly match the bad debt expenses with revenue)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

Allowance Method

A

Normal credit balance:

Beginning Balance (credit)
Add (credit): current year BDE
Subtract (debit): write offs
Ending Balance (credit)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

Allowance Method - % of Sales

A

I/S approach - emphasizes matching

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

Allowance Method - % of A/R

A

B/S approach - the amount of estimated allowance calculated is the ending balance that should be in the AFDA on the b/s

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

Allowance Method - Aging of A/R

A

Emphasizes asset valuation NRV

Balances by due date x Estimated % uncollectible = Estimated Uncollectible Account

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

Write-off of a Specific A/R

A

DR: AFDA (decrease)
CR: A/R (decrease)
I/S no effect and B/S affect in form, not on books - no change

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

Restore account previously written off

A

DR: A/R
CR: Allowance for uncollectible accounts

No changes in current assets, only in form
DR: Cash
CR: A/R (decrease)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
20
Q

Pledging (assignment)

A

Footnote - uses existing A/R as collateral but retains title to the receivables
DR: Cash
CR: Notes Payable

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
21
Q

Factoring - Without Recourse

A 
True Sale and transfer risk to buyer
DR: Cash
DR: Due from factor (security)
DR: Loss on sale of receivables
CR:    Accounts Receivable
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
22
Q

Factoring - With Recourse

A

Sale: factor has an option to re-sell any uncollectible receivable back to the seller
- uncollectible accounts reasonably estimated
Loan (A/R as collateral): Footnote

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
23
Q

F.O.B. Shipping Point

A

Title passes to the buyer when the seller delivers the goods to a common carrier. Included in inventory upon shipment

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
24
Q

F.O.B. Destination

A

Title passes to the buyer when the buyer receives the goods from the common carrier

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
25
Sale with a Right to Return
Cannot be estimated - no sale, should be included in seller's inventory Can be estimated - record sale with an allowance for estimated returns
26
Consigned Goods
The seller should include the goods in its inventory (+ shipment costs) until sold to 3rd party buyer where a sale is recognized then
27
Valuation of Inventory
at cost | Exception: selling price
28
LIFO or Retail Inventory Method
Either Lower of Cost of Market (LCM)
29
IFRS and FIFO, Weighted avg, etc. Inventory (not LIFO or Retail)
Measured at Lower of Cost and Net Realizable Value (NRV)
30
Write down of Inventory
Reflected in decreased COGS = increased Profit | If material, then the loss should be identified separately in the I/S
31
Reversal of Inventory Write-Downs
GAAP - prohibited | IFRS - allowed to the extent of the original write down
32
Lower of Cost or Market (LCM) - GAAP only
Market Value = middle value between Replacement Cost, Market Ceiling, and Market Floor
33
Market Ceiling or NRV
Net selling price - costs to complete = NRV
34
Market Floor
Market Ceiling (NRV) - normal profit margin
35
JE to record the write-down to a separate account
Inventory loss due to decline in market value | Inventory
36
Disclosure of losses
Losses both substantial and unusual from LCM is disclosed in the income from continued operations in the I/S and identified separately
37
Periodic Inventory Method
``` Beginning Inventory + Purchases = COGAFS - Ending Inventory = COGS ``` Valued at end of the period
38
Perpetual Inventory System
Updated for each purchase and each sale as they occur
39
FIFO
First In, First Out Prices rising = decrease COGS = increase Profit Ending inventory and COGS are the same under both periodic and perpetual
40
Weighted Average Method
Usually periodic: total costs of inventory available / the total # of units of inventory available
41
Moving Average Method
Perpetual: computes the weighted average cost after each purchase
42
LIFO
Last In, First Out: (not permitted under IFRS) | Prices rising = increase COGS = decrease Profit
43
LIFO conformity Rule
Used for tax purposes, but then must also use for GAAP Financial Statements
44
Dollar-value LIFO
Measured in Dollars and adjusted for changing price levels: either Internally computed Price Index: EI at c/y cost / EI at base yr cost OR Price Index is supplied
45
Cost of a machine
Include all costs that are reasonable and necessary to get the asset in the condition or location for its intended use
46
Capitalized interest
Lesser of the total interest incurred | or the avoidable interest
47
Machine costs capitalized
Any cost incurred to acquire and make ready a plant asset is capitalized
48
Excavation costs
Treated as part of the cost of the building
49
Capitalized Interest costs
Borrowed funds (not used) = expense Borrowed funds (weighted average of accumulated expense) = capitalize during and expense after construction Excess (above amount borrowed) expenditures (weighted average interest rate) = capitalize during and expense after construction
50
Investment Property, IFRS
Defined as land and buildings held to earn rentals or for capital appreciation
51
Estimated restoration costs
Added to the depletable base of the natural resource. In this way, the amount of depletion charged to expense over the life of the mining operation will include the restoration costs
52
Long-Lived Asset is Impaired
Undiscounted expected future cash flows
53
Impairment loss, IFRS
Fair value less costs to sell - Carrying value
54
Subsequent Reversal of an Impairment Ioss
Prohibited under U.S. GAAP. Impairment loss is permitted under IFRS.
55
Valuation of Fixed Assets (GAAP and IFRS)
Historical Cost or purchase price cost model CV = historical cost - A/D - impairment
56
Donated Fixed Assets
Fixed Asset (FMV) xx Gain on nonreciprocal transfer xx Unusual and infrequent
57
Valuation of Fixed Assets (IFRS)
Revaluation model carrying value = FV at revaluation date - subsequent A/D - subsequent impairment Revaluations made frequent; When fixed assets reported at FV, historical costs equivalent must be disclosed
58
Revaluation Model
Revaluation Losses - I/S Revaluation Gains - OCI Impairment = OCI decreases to zero then loss in I/S
59
Cost of Equipment
Capitalize: Additions (increase quantity/increase usefulness) and Extraordinary repair (increases usefulness) Expense: ordinary repair Reduce A/D: Improvements, repairs, and extraordinary repairs that increase life
60
Cost of Land
All costs incurred up to excavation (digging = building)
61
Cost of Building
Excavation going forward
62
"Backet purchase" of land and building
Allocate the purchase price based on the ratio of appraised value of individual items
63
Straight-line Depreciation
Cost - Salvage Value/Estimated useful life *service potential declines with time
64
Sum-of-the-Years Depreciation
S = N x (N + 1)/2 n = estimated useful life | cost - salvage value) x (remaining life of asset/sum of the years digits
65
Double-Declining Balance Depreciation
2 x 1/N x (cost - accumulated depreciation) * ignores salvage value, but maximum accumulated depreciation = cost - salvage value * asset subject to rapid obsolescence
66
Units of Production Depreciation
Cost - Salvage Value/Estimated units of hours = Rate per unit or hour Rate per unit x # of units produced = Depreciation Expense (variable cost) *service potential declines with use
67
Depletion Base
Cost to purchase the property - Estimated net residual value remaining after all resources have been removed from the property
68
Calculate Depletion
Unit Depletion (depletion base/est. recoverable units) x units extracted COGS Depletion = unit depletion x units sold

CPA (11 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2025 Bold Learning Solutions. Terms and Conditions