Framework, Overview And Statements

Question 1

How is Cash Paid to suppliers determined?

Answer 1

COGS
+/- Inventory change
+/- AP changes
________________

Question 2

What regulation governs the Form and Consent of Financial Statement Disclosures?

Answer 2

Regulation S-X

Question 3

What characteristic relates to both accounting Relevance and faithful Representation?

Answer 3

Comparability

Question 4

What are the roles of the trustees of the trustees of the IFRS foundation?

Answer 4

• Appoint the members of the IASB and establish contracts of service and performance criteria
• Appoint the members of the IFRS Interpretations Committee and the IFRS Advisory Council
• Approve the annual budget of the IFRS foundation and determine the basis for funding

Question 5

In a Statement of Cash Flows, what amount of a cash/mortgage transaction would be considered investing?

Answer 5

The cash payment

The non-cash activity schedule would disclose the acquisition price and amount financed with the mortgage

Question 6

According to ASC topic 820, a stock market quotation from the New York Stock Exchange is considered what level of valuation input for determining fair value measurement?

Answer 6

Level 1

Includes quoted prices from active markets for identical assets or liabilities

Question 7

How are Year End Balances adjusted?

Answer 7

Expenses incurred should match the period of revenues.

Question 8

What is ASC topic 230 about?

Answer 8

Cash Inflows and outflows from trading securities may be included in operating or investing activities based on purpose of the securities.

Financing and investing activities that have no effect on cash flows should be in a separate schedule of non-cash activities or in a footnote. Unrealized gains and losses should be included in current income.

Question 9

IAS 8, Accounting Policies, Changes in Accounting Estimates, and Errors includes the IFRS hierarchy. What is the second level addressing the requirements and guidance in IFRS?

Answer 9

The definitions, recognition criteria, and measurement concepts for assets, liabilities, revenue, and expenses in the framework
(Pronouncements of other standard setting bodies is the third/last level of the hierarchy)

Question 10

What’s the difference between Cash-Basis and Accrual-Basis transactions?

Answer 10

Cash-basis reflects cash transaction that occurred while accrual-basis reflects transactions that are recognized/accrued

Question 11

What is ASC Topic 274 about?

Answer 11

The presentation is estimated income taxes on the excess of the estimated current values of assets over their tax basis in the statement of financial condition. The statement requires that the estimated income taxes are presented between liabilities and net worth.

Question 12

In the Statement of Comprehensive Income/Loss, what would other comprehensive income/loss consist of?

Answer 12

Unrealized gains/losses on available-for-sale securities, minimum pension liability adjustments, foreign currency translation adjustment, and unrealized gains/losses on cash flow hedges

Question 13

How is the Estimated Income Taxes on the excess of current values over tax bases calculated and where is it reported on the balance sheet?

Answer 13

Assets
-
 Liabilities
\_\_\_\_\_\_\_\_\_\_\_
(Difference between current values of net assets and the tax bases of the net assets)
*
 Tax rate
\_\_\_\_\_\_\_\_\_
(Reported as a separate line item between liabilities and net worth section of the statement)

Question 14

What is the Expense Recognition Principle of associating cause and effect about?

Answer 14

Areas like sales commission

Question 15

What is the systematic and rational Allocation Expense Recognition Principle about?

Answer 15

Areas like insurance cost

Question 16

What is the main purpose of the Statement of Cash Flows?

Answer 16

The cash receipts and disbursements of an enterprise during the period

Question 17

What assumption means that money is the common denominator of economic activity and provides an appropriate basis for accounting measurement and analysis?

Answer 17

Monetary unit

Question 18

What is the going concern assumption about?

Answer 18

In the absence of information to the contrary, the corporate entity has an indefinite existence. There a no foreseeable end to the entity under current circumstances

Question 19

What items are reported on the Income Statement?

Answer 19

Gains from extinguishment of debt

+

Question 20

According to the IASB framework, what are the two criteria required for incorporating items into the Income Statement or Statement of Financial Position?

Answer 20

IFRS states an item must meet the definition of an element and can be measured reliably to be included in financial statements

Question 21

What form is used to file an annual report with the SEC?

Answer 21

10-K

Question 22

What is the SEC form used by issuer companies to file as a quarterly report With the SEC?

Answer 22

10-Q

Question 23

What items are included in the Statement of Cash Flows investing activities?

Answer 23

Sale of buildings
Sale of securities for sale
Purchase of other plant assets

Question 24

What Year-end adjustments should be made to balances?

Answer 24

Expenses incurred but not yet billed should be added to the balance.

Question 25

How are prepaid expenses reported?

Answer 25

Prorated at year-end and included under prepaid account

Question 26

What is ASC Topic 255 about?

Answer 26

COGS is restated into average current cost as follows: Units sold * Average current cost during the year (unit current cost at begin of year + unit current cost at year-end/2) ___________

Question 27

How should amortization of Bond discount on long-term debt be reported in the Statement is cash flows using the indirect method?

Answer 27

In operating activities as an addition to income

Question 28

What is a Bond issued at discount and how does it work?

Answer 28

The issue price is less than the face or maturity value. When cash is paid to bondholders the principal is multiplied by the coupon rate. Since the carrying value is less than face value, the effective interest on the bond will be less than the amount paid

Question 29

According to conceptual framework, what is the quality of information that helps users increase the likelihood of correctly forecasting the outcome of past or present events?

Answer 29

Predictive value

Question 30

What are the two characteristics of Financial Statement information?

Answer 30

Relevance | Faithful representation

Question 31

What organization is responsible for setting the International Financial Reporting Standards?

Answer 31

International Accounting Standards Board | International Accounting Standards Committe (IASC) set the former International Accounting Standards (IAS)

Question 32

What reasons are prospective financial statements prepared?

Answer 32

Budget preparation External financing Accounting or operational change consideration

Question 33

Under the indirect method, why is depreciation treated as an adjustment to reported net earnings in the operating activities section of the Statement of cash flows?

Answer 33

Depreciation reduces reported net earnings but does not involve an outflow of cash so it is added back to net earnings under the indirect method

Question 34

According to IFRS, what are the required classifications for a Classified Statement of Financial Position?

Answer 34

Current and non-current assets and liabilities

Question 35

According to IFRS, how are Interest payments reported in the Statement of Cash Flows?

Answer 35

Finance costs (interest expense) can be reported in the operating or financing section of the statement of cash flows (Once it is disclosed in a particular section it must be reported on a consistent basis)

Question 36

In a Personal Statement of Financial Condition, should marketable debt and/or equity securities be reported at quoted market prices?

Answer 36

Both should report at market price

Question 37

In the Statement of Cash Flows, what's included in investing activities?

Answer 37

Purchase and Sale of Securities | Interest and dividends are operating cash flow

Question 38

With the Direct Method for Statement of Cash Flow, what accounts are used to determine the interest paid?

Answer 38

Interest Expense Account - Unamortized Bond Discount Account (decrease from past year)

Question 39

If a Prepayment is debited to an expense account, how is it offset?

Answer 39

Debiting the prepaid asset account | Crediting the expense account

Question 40

How is book value per share of common stock determined?

Answer 40

Common Stockholder's Equity _____________________ Outstanding Shares (The amount allocated to preferred stock is deducted from total stockholder's equity to obtain common stockholder's equity)

Question 41

What items are included in the definition of IFRS (IAS 8 paragraph 5)?

Answer 41

IAS's IFRIC's IFRS Interpretations

Question 42

What does an increase in prepaid expense mean?

Answer 42

More cash was paid than expenses | Reconciliation of operating expense to cash paid=total expenses+increase in prepaid expenses

Question 43

What does an increase in accrued liabilities mean?

Answer 43

More expense was accrued than paid | Reconciliation of operating expense to cash paid=total expenses-increase in accrued liabilities

Question 44

According to ASC Topic 274, what should financial statements present?

Answer 44

Assets at their estimated current value at the date of Fin Statements. Liabilities at their estimated current amounts at the date of statements

Question 45

According to ASC optic 820, what are acceptable valuation approaches?

Answer 45

Cost approach Market approach Income approach

Question 46

What must be disclosed in the period of the bargain purchase for a business combination?

Answer 46

Gain amount recognized Basis description Income Statement line item that includes the gain

Question 47

How is the Direct approach to net Cash Flows in operations computed?

Answer 47

Each income Statement item is directly adjusted for changes in related balance Sheet items to compute net cash flow: ``` Cash received + Rent received - Cash paid to supplier & employees - Taxes paid __________ Net cash flow from operations ```

Question 48

What is MES?

Answer 48

Marketable Equity Securities

Question 49

In the indirect method, how is investing cash flow determined?

Answer 49

``` Increase in non-current assets + Increase in Securities _______________________ Investing cash flow ```

Question 50

Who is a member of the monitoring board?

Answer 50

Chair of the U.S. SEC

Question 51

What is the function of the Monitoring Board?

Answer 51

Provides a formal link between the Trustees and public authorities?

Question 52

What is the SEC and it's mission?

Answer 52

The primary overseer and regulator of the U.S. Securities market with the mission to protect investors/maintain fair, orderly, & efficient markets/facilitate capital formation

Question 53

Does Fin Statements provide information about management performance?

Answer 53

No

Question 54

Where on the Balance Sheet is accumulated other comprehensive income reported?

Answer 54

As a separate item under stockholder' equity | Foreign currency translation adjustment is included in other comprehensive income

Question 55

In fair value determination, are exit and entry prices different and could they have different amounts at date of recognition?

Answer 55

Yes & Yes

Question 56

How are Cash Flows from Financing Activities determined?

Answer 56

Cash Flows from liabilities and equity other than operating items such as: ``` Bank borrowing + Dividend payment - Stock issuance + Bank loan payment - ______________________ Net cash used in fin activities +/- ```

Question 57

What must the Direct Method Statement of Cash Flows be supported by?

Answer 57

Supplemental disclosure of a reconciliation which is net income to net cash flows from operations

Question 58

IASB's framework for the preparation and presentation of financial statements has converged with FASB's SFAC 8, what does faithful representation include?

Answer 58

Completeness Neutrality Free from error

Question 59

How is a cash-basis business' net income converted to accrual-basis for year-end?

Answer 59

Normal effect on cash are inverted to reflect accrual effect (A decrease in AP from start to end of year would normally mean that $2,000 more was paid out under accrual but in reality $2,000 was added back to net income. At the beginning of the year to reflect the cash-basis effect, AP was added to income since there was a reduction in money that was never paid)

Question 60

Under Statement of financial accounting concepts 8, what does completeness fall under?

Answer 60

Faithful representation

Question 61

How is the reconciliation of net income and net cash flow from operations calculated?

Answer 61

(Indirect Method shown) ``` Net income + Depreciation expense - Gain on sale of equipment ______________ ```

Question 62

What are some assets included in the asset section of the Balance Sheet?

Answer 62

- Idle machinery | - Cash surrender value of life insurance

Question 63

What kind of account is treasury stock?

Answer 63

A contra-equity account

Question 64

With the indirect method of Statement of Cash Flow, how is the change in unamortized Bond discount reported?

Answer 64

A decrease is reported as an addition to net income in the operating activities section

Question 65

How is Average Days Sales in Inventory calculated?

Answer 65

Average Inventory [(begin+end)/2] ___________________ COGS/annul days

Question 66

What are the components of comprehensive income?

Answer 66

- Net income - Foreign currency translation adjustment - Unrealized gain/loss on AFS Securities - Foreign currency translation adjustment - Unrecognized gain/loss on pensions - Deferred gain/loss on hedging