Brainscape's Knowledge GenomeTM


Top Flashcards (Certified)
All Flashcards

FAR > General Knowledge > Flashcards

General Knowledge Flashcards

1
Q

What is the Three-Month Rule for securities

A

Highly liquid securities with ORIGINAL maturity dates of three months or less are treated as cash.

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

Bad Debts - Direct Write-Off Method

A
  • No entry for bad debts until customer actually defaults.
  • At default, the customer’s account is written off.
  • Theoretically weak, matching issue
  • Only allowed if bad debt expense is immaterial
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

Income Statement Approach

A
  • Matching Concept
  • Estimate of bad debt expense is based on the income statement
  • Allowance account balance has no bearing on the amount of adjustment
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

3 types of Investments

A
  • Held-to-Maturity
  • Trading Securities
  • Available-for-Sale Securities
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

What is Held-to-Maturity Securities

A
  • Debt securities only
  • Mgt has both intent and ability to hold the securities to maturity
  • Classified on BS based on maturity date
  • Carry on balance sheet at amortized cost
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

What is Trading Securities

A
  • Equity or Debt securities held primarily for sale in the near term
  • Classified on BS as current
  • Carried on BS at FMV
  • Unreal holding gains/losses belong on the income statement
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

What is Available-for-sale Securities

A
  • Debt or Equity securities not classified as either HTM or Trading
  • Debt is classified on BS by maturity date
  • Equity securities are classified by mgt’s intent
  • Carried on BS at aggregate FMV
  • Unreal G/L go directly to SH equity (other comprehensive income)
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

What is Derivatives

A

Investment that derives its value from something else (asset or liability)

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

What is Hedging

A

Strategy of investing in a derivative to counterbalance the potential loss from another security or transaction

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

What is Non-Hedge Derivatives

A
  • Record on BS as asset or liability at FMV

- Report unrealized G/L on IS

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

What is Fair Value Hedge

A

Protects against potential loss from the change in an asset’s or liabilities’s FMV

  • Record on BS as asset or liability at fair market value
  • Report unrealized holding G/L on IS
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

What is Cash-Flow Hedge

A

Protects against potential loss from an asset’s or liability’s future cash flow

  • Record on BS as asset or liability
  • Unreal G/L depend on whether hedge is effective
  • Effective cash flow hedges counterbalance losses elsewhere
  • Ineffective cash flow hedges are reported on the IS
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

What is Weighted Average

A

The weighted average cost per unit must be calculated. The ending inventory valuation is equal to the number of units in ending inventory multiplied by the WA cost per unit. Likewise, the cost of goods sold for the period is equal to the number of units sold multiplied by the WA cost per unit.

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

Weighted Average Cost Per Unit =

A

Cost of Goods /

Number of Units

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

FIFO

A

Assumes ending inventory contains the most recently acquired units

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

LIFO

A

Assumes ending inventory contains the oldest inventory layers

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

How to Calculate Cost of Goods Sold

A 
Beginning Inventory
 \+ Net Cost of Purchases
 = Goods available for Sale
 - Ending Inventory
 =Cost of Goods Sold
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

How does dollar value LIFO work?

A

Inventory accounted for in layers. Base year layer accounted for in base year prices, while current year layer accounted for in current prices.

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

What are the three criteria for prior period adjustments?

A

(1) effect of the adjustment is material to income from continuing operations; (2) adjustment can be identified with a prior period; and (3) amount of the adjustment could not be estimated in prior periods

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

How do you calculate the PV of a bond?

A

PV of one dollar at yield rate times face value of bond add that to face value times stated rate times PV of ord annuity of $1.00 at yield rate

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

For long-term Construction type contracts when are losses Recognized

A

Losses are recognized Immediately When Discovered, regardless of the method used for revenue recognition

22
Q

When Should the costs of developing computer software for resale, lease, or licensing be capitalized under U.S. GAAP

A

After Technological Feasibility has been established and before the product is released for sale

23
Q

Goodwill is defined as

A

The Excess of the Fair Value of a Subsidiary over the Fair Value of the Subsidiary’s Net Assets

24
Q

What is the accounting treatment for Costs of Maintaining or developing Goodwill

A

These costs can not be capitalized, they must be expensed

25
What are the 5 conditions for Revenue Recognition When the Right of Return Exists
The Sales Price is Substantially Fixed at the time of sale The Buyer Assumes All Risks of Loss The Buyer has paid consideration The Product sold is substantially complete The Amount of Future Returns can be Reasonably Estimated
26
The four Criteria that Must be Met Before Revenue can be recognized includes
Persuasive Evidence of an Arrangement Exists(Contract) Delivery has occurred or services have been rendered The Price is Fixed and Determinable Collection is Reasonably Assured
27
Common Revenue Recognition Criteria under IFRS Include
Revenues and costs can be Reliably Measured | It is Probable that Economic Benefits will flow to the entity
28
What are the Criteria for revenue recognition under GAAP
Earned and Realized or Realizable
29
State Two Types of Foreign Currency Transactions
Operating Transactions such as importing exporting borrowing lending or investing activities Forward Exchange contracts, which are agreements to exchange two different currencies at a specific future date and at a specific rate
30
Where are Translation Adjustments reported in the financial statements
Translation Gains and Losses are reported in OCI and are treated as Unrealized Gains and Losses
31
Identify the Exchange Rate to be used when Remeasuring different components of the Balance Sheet
Monetary items, use the current exchange rate Nonmonetary items, use the historical rate
32
Identify the Exchange Rate to be used when Remeasuring different components of the Income Statement
Balance Sheet Related Items, use the Historical rate | Non Balance Sheet Related Items, use the Weighted Average Rate
33
Identify the Exchange Rate to be used when Translating different components of the Balance Sheet
Current Exchange Rate for Assets and Liabilities | Historical Rate for Common Stock and APIC
34
Identify the Exchange Rate to be used when Translating different components of the Income Statement
Weighted Average Rate for Revenue and Expenses
35
When is the Re-measurement Method Used
The Reporting Currency is the Functional Currency The Financial Statements must be restated in the entity's functional currency prior to translating from the functional currency to the reporting currency
36
What is the Re-measurement Method
It is when we Restate the Financial Statements from the Foreign Currency to the Entity's Functional Currency
37
When is the Translation Method Used
To Restate Financial Statements Denominated in the Functional Currency to the Reporting Currency
38
Under GAAP what is an Entity's Functional Currency
The Currency of the Primary Economic Environment in Which the Entity Operates. All of the Following Conditions must be met The Foreign Operations are Relatively Self-Contained and integrated within the country The Day-To-Day Operations do not depend on the parent's or investor's functional currency The local economy of the foreign entity is not highly inflationary
39
What are Non-monetary Items
Assets and Liabilities that Fluctuate in Value with Inflation and Deflation For Example, Inventory, PP & E, Capital Stock These items need to be restated in constant dollars
40
What are Monetary Items
Assets and Liabilities that are fixed in amount by contract or in terms of number of dollars Examples include cash, accounts receivable, accounts payable These are already stated in constant dollars
41
How are gains and losses on Nonmonetary exchanges recognized under IFRS
Exchanges of Similar Assets, no gains, losses in full | Exchanges of Dissimilar Assets, Gains and Losses in Full
42
How are gains and losses on nonmonetary exchanges such as Commercial Substance recognized under GAAP
Always Recognize Gains and Losses equal to the difference between the Fair Value of what was given up and the book value of what was given up
43
How is Goodwill Impairment Analyzed under IFRS
Under IFRS Impairment Testing is done at the Cash Generating Unit level using a one step test that compares the carrying value of the CGU to the CGU's recoverable Amount Losses are allocated to goodwill then on a pro rata basis to the other CGU assets
44
How is Goodwill Impairment Analyzed under GAAP
Two Step Process at the Reporting Unit 1. Compare the Fair Value with the units Carrying Value, including Goodwill 2. Compare the Implied Fair Value to the units Carrying Value
45
What is the Calculation for Impairment Loss under GAAP
Carrying Value minus the Fair Value
46
What is the Calculation for Impairment Loss under IFRS
Carrying Value minus the Recoverable Amount
47
Define Accounting Error
An error in recognition, measurement, presentation or disclosure in the financial statements. IE.... mathematical mistakes, mistakes in applying GAAP, or oversight of facts that existed when the financial statements were prepared. A change in accounting principle from non-GAAP to GAAP is also a correction of an error
48
Accounts INCREASED with a DEBIT
D-Dividends (Draws) E-Expenses A-Assets L-Losses DEAL increase with a Debit
49
Accounts INCREASED with a CREDIT
``` G-Gains I-Income R-Revenue L-Liabilities S-Stockholders' (Owners's) Equity ``` GIRLS increase with a Credit
50
REV is recognized when:
+Signed Contract +Services rendered or delivery +Fixed or determinable price +Collection is reasonably assured
51
EXP is recognized when:
+Economic benefit is consumed or asset uses future benefit * EXP can be matched to REV (COGS) * EXP can be matched to period (depreciation) * EXP expensed as incurred (salaries of admin employees)

FAR (25 decks)

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