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Flashcards in Mod 9A And D Review Deck (37):

What are the enhancing qualitative characteristics of financial reporting 4

1 comparability (including consistency)
2 verifiability
3 timeliness
4 understandability


Relevance and faithful representation are...

Fundamental qualitative characteristics of financial information


Cost benefit is a...

Financial statement Constraint


Materiality is a...

Threshold for reporting useful information


An estimate of an impairment charge to a fixed asset can be...

Faithful representation


An estimate of an impairment charge to a fixed asset can only be a faithful representation if the entity has done all of the following...3

1 applied impairment rules properly

2 disclosed the process of arriving at impairment estimate

3 disclosed any uncertainties that affect impairment estimate


On an impairment, assuming all of the criteria for faithful representation is met, no other estimate is better than...

The derived estimate comprised of the best available info


Per SFAC 6, revenues are...

Inflows of assets or settlements of liabilities, or both

During period as a result of entities major or primary activities


2 essential characteristics of revenues are that revenues...

1 arise from companies primary earning activities

2 are recurring or continuing in nature


A decrease in an asset is not...

A revenue


When calculating unearned revenue for gift certificates, if 10% of revenue is expected to not be redeemed in the future, then...

10% of sales must be subtracted from total sales


When converting from the cash basis to the accrual basis to report rental income, uncollectible rents written off under the cash basis...

Should be added back into accrual basis rental sales


Under the milestone method, contingent revenue may be...

Recognized in its entirety in period where milestone is achieved


Upon first time adoption of IFRS, an entity may elect to use fair value as deemed cost for...

Any individual item of property, plant and equipment


Performance measure concerned primarily with cash to cash cycles



Depreciation expense, prepaid rent and unearned revenue are all examples of...



Receivables and payables are examples of...



What is the accrual worksheet entry for adding an allowance for uncollectible accounts?

Uncollectible accounts. Xxx
Allowance for uncollectible accounts. Xxx


What is the worksheet entry to add to inventory?

Inventory. Xxx
Cost of sales. Xxx


What is the worksheet entry to record prepaid insurance and adjust insurance expense?

Prepaid insurance. Xxx
Owner's capital. Xxx
Insurance expense. Xxx


What is the worksheet entry to record a probable legal loss?

Estimated loss from lawsuit. Xxx
Estimated liability from lawsuit. Xxx


What is the worksheet entry when there is an increase in payroll tax expense and utilities expense, as part of accrued expenses for the year?

Utilities expense. Xxx
Payroll tax expenses. Xxx
Owner's capital. Xxx
Accrued expenses. Xxx


What is the worksheet entry when living expenses were incorrectly used and proprietors income was incorrectly included in salaries and wages?

Owner's, drawings. Xxx
Living expenses. Xxx
Salaries. Xxx


What amount should be included in income from continuing operations before tax? Calculation

Net of tax amount/(1-tax rate)


Warranty liability for year one, how is it affected by a recall before issuance in year 2?

Add the recall amount to year 1 warranty liability


A loss for a recognized subsequent event should be reported in...

The current year financial statements


Recognized subsequent events result in a loss recognized in the current year and a...

Corresponding adjustment to record the liability


The price paid to acquire an asset is...

An entry price, not an exit price


The fair value of an asset definition

Price that would be received to sell the asset at the measurement
Date under current market conditions


Current cost for inventories and equipment is measured on the supplementary information at...

The lower of current cost or recoverable amount


For comparative purposes IFRS requires...

The presentation of prior year financial statements


Under IFRS the statement of cashflows my be presented on...

The direct or indirect basis


All corrections of errors should be treated as...

A restatement of prior period financial statements


All corrections of errors on financial statements require a prompt recording the...

Error in the year in which the error was discovered


An error should be reported in the financial statements as an adjustment to...

The carrying value of the assets and liabilities as of the beginning of
The first period presented

With an offsetting adjustment to the opening balance of retained
Earnings for that period


The accumulated changes in valuation (unrealized excess of cost over market value) of available for sale marketable equity securities shall be reported as...

Accumulated other comprehensive income


Results of operations of a component that has been or will be discontinued should not be reported as part of...

Other comprehensive income