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Flashcards in Quiz Generator Wrong Answers Deck (58):

Any error in the financial statements of a prior period discovered after the financial statements are issued, shall be reported as...

An error correction, by restating prior period financial statements


Failure to accrue a cost in 20x1 is an error which should be reported in 20x2 as...

As a prior period adjustment


Change in depreciation is a change in accounting estimate shown on...

The income statement


With respect to the objective of general purpose financial reporting, what are US GAAP and IFRS differences?

With the issuance of SFAC 8, chapter 1, US GAAP and IFRS have
The same "objective of general purpose financial reporting"


How should the effect of a change in accounting principle that is inseparable from the effect of a change in accounting estimate be reported?

As component of income from continuing operations


Whenever a change in accounting principle is inseparable from a change in accounting estimate, the change should be considered as...

A change in an accounting estimate


Guaranteed residual value should be added to...

Minimum lease payments at present value


Capital lease accounting for a lesser involves determining...

Amounts and timing of all cash flows not considered Executory


Capital lease accounting for a lessee includes...2

1 minimum lease payments

2 residual values


Under a capital lease of a lesseeThe sum of minimum lease payments and guaranteed residual value is...

Capitalized as an asset


Under IFRS, what are 2 measurements allowed to estimate and report a liability for the cost of settling a lawsuit?

1 use range of amounts that may be lost in lawsuit and the best
Number in the range must be chosen to accrue

2 chosen amount must always be discounted to present value


When calculating units of production method of depreciation, what is the calculation in the first year

Depreciation expense =
(Cost - Salvage value) x (units consumed/total units)


The first balance sheet must recognize all assets and liabilities as required by IFRS and...

All assets and liabilities as required by IFRS


For available for sale securities, if a decline in value is not temporary, the cost basis of the individual security should be...

Written down to fair value and the amount of the write down
Is included in earnings (income statement)


A financial instrument that embodies an unconditional obligation or one other than an outstanding share that embodies a conditional obligation, that the issuer must or may settle by issuing a variable number of its equity shares must be classified as a liability if at inception, the monetary value of the obligation is based solely or predominantly on any one of the following 3 conditions...

1 fixed monetary amount known at inception

2 variations in something other than the FV of issuer's equity shares

3 variation inversely related to changes in FV of issuer's equity shares


Fixed monetary amount known at inception, example

Payable settleable with variable number of issuer's equity shares


Variations in something other than the fair value of the issuer's equity shares, example

Financial instrument indexed to S&P 500 and settleable with a
Variable number of issuer's equity shares


Variations inversely related to changes in fair value of the issuer's equity shares, example

Written put option that could be net share settled


During periods of inflation, a perpetual inventory system would result in the same dollar amount of ending inventory as periodic inventory system under which inventory valuation method?

Same under FIFO

Not same under LIFO


The lessor shall measure the gross investment in a direct financial lease initially as the sum of the following 2 amounts

1 minimum lease payments

2 Unguaranteed residual value accruing to benefit of lessor


In the company's year end balance sheet, what amount of liability for compensated absences is required for reporting?

Payment for vacation days = $10,000
Unadjusted liability balance = $21,000

$10,000 only


Research and development costs are defined as the...

Planned research for new knowledge and the translation of
research findings into a design for a new product or process


Development of software for internal use is...

Excluded from research and development


Marketing research is...

Specifically excluded from research and development


The SEC website lists the following 3 steps in the rule making process...

1 concept release

2 rule proposal

3 rule adoption


Common stock dividend is...

Not considered income


Dividend income for the year would includes...

Both current year dividends and cumulative dividends


An employer's obligation for post retirement health benefits that are expected to be provided to or for an employee must be fully accrued by the date where...

Employee is fully eligible for benefits


What is the journal entry for an operating lease payment of $25,000, when the lease is for 3 years total with total payment of $90,000?

Rent expense 30,000
Cash. 25,000
Lease liability. 5,000


How is an unconditional purchase commitment reported?

Not reported in the balance sheet, but disclosed in the notes
At present value of future required payments


Title search fees are...

A capitalized cost to land


Where in its financial statements should a company disclose information about its concentration of credit risks?

Notes of financial statements


Per GASB, net position should be reported as restricted if use is constrained either by...2

1 Externally imposed conditions such as from creditors or grantors

2 or by legislation


Councils actions do not constitute...

Restrictions on net position


Which of the following is not an item that is required to be disclosed about reportable segments profit or loss?

Rent expense


Conceptually interim financial statements emphasize...

Timeliness over faithful representation


A gain on a foreign currency transaction pertaining to a receivable or payable purchased in a foreign currency. Where is it reported?

on the income statement


What is the adjusting journal entry entered for a gain on a futures contract?

Option (futures contract). Xxx
Unrealized holding gain-equity. Xxx


How is a notice a college receives from a recent graduate that the college is named as a beneficiary of $10,000 in the graduates will treated on the public college's statement of activities? Why?

It should not be recognized that year

Wills can change and there is a lot of uncertainty


When Remeasuring foreign currency financial statements into the functional currency, what item would be re measured using historical exchange rates?

Inventories carried at cost


Combined statements may be used to present the results of operations of...2

1 commonly controlled companies

2 companies under common management


How are discontinued operations and extraordinary items that occur at mid year initially reported for interim statements?2

1 reported separately net of tax on income statement for interim

2 disclosure in notes of interim statements


How do you calculate end of year retained earnings for an equity method investment!

End of year retained earnings =
Beginning of year retained earnings + net income - dividends


Reconciliation of ending retained earnings to net cash flow from operations would serve...

No useful purpose and not be disclosed in statement of cash flows


Interest payments on the statement of cashflows are...

Included in operating activities


In a consolidated balance sheet, what amount should a company report as intercompany receivables?



An entity must classify as a liability a financial instrument, other than an outstanding share, that, at inception both...

1 embodies an obligation to repurchase the issuer's equity shares
2 requires/may require issuer to settle obligation by transferring


An entity must be classify as a liability a financial instrument, other than an outstanding share, that at inception both embodies an obligation to repurchase the issuer's equity shares and requires/may require issuer to settle obligation by transferring Assets. Examples 2

1 forward purchase contracts

2 written put options on issuer's equity shares that are physically
Settled or net cash settled


Under GASB, Programs are financed from...

Program revenues and general revenues


Under GASB, program revenues are derived...2

1 Directly from program itself
2 from parties outside the reporting government's taxpayers or
Citizenry as a whole


Under GASB, All revenues are general revenues unless...

They are required to be reported as program revenues


Under GASB, all taxes are...

General revenues


3 classes of freestanding financial instruments that must be presented in the balance sheet as liabilities (they are not presented between liabilities and stockholder's equity)

1 mandatorily redeemable financial instruments

2 obligations to repurchase the issuer's equity shares by
Transferring assets

3 certain obligations to issue a variable number of shares


Acquisition related costs are...

Costs the acquirer incurs to effect a business combination


All acquisition related costs should be...

Expensed in the period incurred


Costs incurred by the acquiring entity that are directly related to acquisition are...

Expensed as incurred


Indirect acquisition costs incurred by the acquiring entity are...

Expensed as incurred


Earnings per share data should be be reported on the face of the income statement or other related notes for entity that reports...3

1 discontinued operation

2 extraordinary item

3 cumulative effect of an accounting change