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Flashcards in Financial Statements Deck (27)
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1
Q

Which Personal Financial Statements are required?

A

Statement of Financial Condition & Statement of Changes in Net Worth

2
Q

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

A

Estimated current value

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

4
Q

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

A

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

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

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

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.

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

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

10
Q

How are cumulative gains and losses reported in Interim Financials?

A

Reported as if they occurred in the first quarter

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

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

13
Q

For whom is Segment Reporting required?

A

Publicly traded companies

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

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

16
Q

The SEC requires how many years on the IS and BS

A

Balance Sheet is 2 yrs, the Income Statement is 3 yrs. This comparative informatino is not required by GAAP

17
Q

Name the ten elements of financial statements as described in SFAC 6

A

Assets, Liabilities, Equity, Investments by owners, Distributions to owners, Comprehensive income, Revenue, Expenses, Gains, and Losses

18
Q

Items that are unusual or infrequent are included in which section of the income statement

A

Income from conintuing operations

19
Q

What is an extraordinary item per GAAP/IFRS

A

Both infrequent and unusualy, IFRS does not allow for extraordinary items

20
Q

How should A/R be presented on the B/S

A

A/R should be shown at NRV. This is the A/R less AFDA

21
Q

Name the 3 major sections of the Comprehensive Annual Financial Report (CAFR)

A

Introducotry, Financial, and Statistical

22
Q

What is the calculation for comprehensive income

A

Ni + OCI

23
Q

What makes financial information relevant

A

If it has Predictive Value and/or Confirmatory Value

24
Q

Is restricted cash required to be presented separately on the B/S

A

Yes

25
Q

Information that is a faithful representation has what three characteristics

A

Complete, Neutral, and Free from error

26
Q

How are extraordinary items and discountinued items presented on the IS

A

Net of Tax

27
Q

The SEC requires how many years on the IS and BS

A

Balance Sheet is 2 yrs, the Income Statement is 3 yrs. This comparative informatino is not required by GAAP