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CPA > Final FAR Review Deck > Flashcards

Final FAR Review Deck Flashcards

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1
Q

What application should be used for estimate changes?

A

Prospective Application

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2
Q

What application should be used for accounting principle changes?

A

Retrospective Application

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3
Q

What application should be used for error correction changes?

A

Retrospective Application

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4
Q

What is prospective application?

A

(going forward only)

This is used with changes in estimates

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5
Q

What is retrospective application?

A

(going back in time)

This is used with changes in accounting principle, AND for the correction of errors

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6
Q

What does comprehensive income include?

A

net income + other comprehensive Income = comprehensive income

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7
Q

What does other comprehensive income include?

A

PUFIER

  • Pension Adjustments
  • Unrealized gains and losses (available-for-sale debt securities)
  • Foreign Currency Items
  • Instrument-specific credit risk
  • Effective Portion of Cash Flow Hedges
  • Revaluation Surplus (IFRS Only)
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8
Q

How to convert cash-basis to accrual-basis?

A
  1. Add increase to current assets
  2. Subtract decreases in current assets
  3. Add decreases in current liabilities
  4. Subtract increases in current liabilities
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9
Q

What is the current ratio equation?

A

Current ratio=Current assets/Current liabilities

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10
Q

What is the quick ratio equation?

A

Quick ratio=Cash & cash equivalents+Short-term marketable securities+ (Receivable net - AFUC) /Current liabilities

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11
Q

What is the accounts receivable turnover equation?

A

Accounts receivable turnover=Sales (net)/Average accounts receivable (net)

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12
Q

What is the inventory turnover equation?

A

Inventory turnover=Cost of goods sold/Average inventory

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13
Q

What is the days in inventory equation?

A

Days in inventory=Ending inventory/(Cost of goods sold/365)

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14
Q

What is the accounts payable turnover equation?

A

Accounts payable turnover=Cost of goods sold/Average accounts payable

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15
Q

What is the asset turnover equation?

A

Asset turnover=Sales (net)/Average total assets

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16
Q

What is the profit margin equation?

A

Profit margin=Net income/Sales (net)

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17
Q

What is the return on assets (ROA) equation?

A

Return on assets=Net income/Average total assets

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18
Q

What is the return on equity equation?

A

Return on equity=Net income/Average total equity

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19
Q

What is the return on sales equation?

A

Return on sales=Income before interest income Interest expense, and taxes/Sales (net)

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20
Q

What is the debt-to-equity equation?

A

Debt-to-equity ratio=Total liabilities /Total equity

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21
Q

What is the total debt ratio equation?

A

Total debt ratio=Total liabilities/Total assets

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22
Q

What is the operating cash flow ratio equation?

A

Operating cash flow ratio=Cash flow from operations/Current liabilities

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23
Q

What is the equation for sales revenue?

Study These Flashcards
A

Sales Revenue=Credits to sales revenue/Sales tax plus one

24
Q

What is the working capital turnover equation?

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A

Working Capital Turnover = Sales/Average working capital

25
DEAD
Debit Expense Assets Dividend
26
CRLS
Credit Revenue Liabilities Stockholders equity
27
How do you calculate the cost of goods sold?
``` Beginning Inventory +Purchases =Goods available for sale -Ending Inventory =Cost of goods sold ```
28
What is a large accelerated filer and when do they need to file there 10-K & 10-Q?
A large accelerated filer is a company with a market value of $700 million or more - File the 10-K within 60 days of fiscal yearend - File the 10-Q within 40 days of the end of the quarter.
29
What is an accelerated filer and when do they need to file there 10-K & 10-Q?
An accelerated filer is a company with a market value between $75 and $700 million - File the 10-K within 75 days of fiscal - File the 10-Q within 40 days of the end of the quarter.
30
What is a nonaccelerated filer and when do they need to file there 10-K & 10-Q?
A nonaccelerated filer is a company with a market value of less than $75 million. - File the 10-K within 90 days of fiscal year - File 10-Q within 45 days of the end of quarter.
31
FIFO (First in, first-out)
When prices are rising using FIFO, COGS is the lowest and provides the highest net income, also the highest ending inventory.
32
LIFO (Last in, first-out)
When prices are rising using LIFO, this gives the highest COGS and lowest net income, and the lowest ending inventory
33
Should legal fees & other costs associated with registering a patent be capitalized or expensed?
Capitalized
34
Should Research & development cost be capitalized or expensed under US GAAP?
Expensed
35
What is the index equation?
Index equation=Ending Inventory at current yr cost/Ending inventory at base yr cost
36
What is the perpetual inventory system?
A perpetual system records the purchases and sales of inventory items as they occur. Physical count still takes place to verify the inventory.
37
What is the periodic inventory system?
A periodic system records inventory by a physical count usually done annually
38
When does an exchange have commercial substance?
An exchange has commercial substance if the future cash flows change as a result of the transaction The fair value approach is used and gain/losses are recognized.
39
When does an exchange lack commercial substance?
An exchange lacks commercial substance if the projected cash flows after the exchange are not expected to change significantly.
40
When should you record a gain or losses that lacks commercial substance?
You would record a gain when: - The boot is received = Recognized proportional gain (< 25 percent rule) You would record a loss when: - A loss is indicated
41
How do you find out noncontrolling interest (NCI)?
NCI=Fair value of subsidiary * NCI% or NCI=Fair value of the subsidiary - Acquisition cost
42
How do you find out noncontrolling interest (NCI) under IFRS?
NCI = FV of subsidiary net assets * NCI%
43
Should you value equity securities at fair value & carrying value?
Fair Value
44
Should available for sale securities at fair value & carrying value?
Fair value
45
What are serial bonds?
They are bonds that mature at staggered intervals
46
What is the statement of financial position?
The statement of financial position is the balance sheet for not for profit (NFP) organization Note: Net position instead of stockholders equity, since there are no shareholders in the NFP
47
What is the statement of activities?
The statement of activities is the income statement for not for profit (NFP) organization
48
What are the financial statements for a not for profit?
Statement of financial position Statement of activities Statement of cash flows
49
What are some examples of current assets?
* Cash * Inventory * Prepaid expenses * Accounts receivable * Short term investments
50
What are some examples of long-term assets?
* Property, plant, and equipment * Investments * Goodwill * Patents
51
What are some examples of short-term liabilities?
* Accounts payable * Short term debt * Bonds or dividends payable within the next year * Income tax payable * Accrued expenses * Deferred revenue
52
What are some examples of long-term liabilities?
* Notes payable * Capital lease obligations * Bonds payable (noncurrent)
53
What is included in the significant accounting policies?
• A company’s revenue recognition policies • How a company determines what investments are cash equivalents • How a company prices their inventory • Methods for amortizing intangibles
54
What are the three fund types?
- Governmental fund (Modified Accrual), Financial Resource measurement focus - Proprietary fund (Accrual), Economic Resource Measurement Focus - Fiduciary fund (Accrual), Economic Resource Measurement Focus
55
What do government funds include?
``` GRaSPP -General Fund -Special Revenue and -Debt Service Fund -Capital Projects Fund -Permanent Fund ```
56
What do proprietary funds include?
SE - Internal Service - Enterprise
57
What do Fiduciary funds include?
CIPPOE - Custodial Fund - Investment Trust Fund - Private Purpose Trust Fund - Pension (and other employee benefits) trust Fund

CPA (3 decks)

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