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Flashcards in Test 1 other questions Deck (25):
1

When you write down inventory, the lower of cost and net realizable value may be written back up if market value increases.

FALSE

2

LCM and LCNRV are criticized for their lack of

Consistency

3

IFRS says that inventory is valued at

lower of cost and NRV

4

An example of change in accounting principle would be changing an estimate and the reporting entity.

false

5

When you change to the lifo method this will require a retrospective change

False

6

There are how many acceptable approaches for changes to accounting principles?

only two

7

If you are changing an accounting estimate what approach will you not use?

retrospective

8

prospective approaches changes are seen where?

current and future years

9

Changes from lifo to fifo are NOT changed how

retrospectively

10

Companies should NEVER include cumulative accounting changes in their income statement

True as heck

11

If you change type of depreciation do you need to provide a adjustment or correction

heck no you just do it differently from now on

12

Are the purchasing and trading of securities always considered investing activities?

Heck no they are operating

13

What does the IFRS say about classifying securities?

They need to be AFS or FVPL

14

Which of the broad categories of securities does not include equity securities?

HTM

15

How do you record changes in FV for HTM securities?

You Don't! Ha!

16

When talking about zero-coupon bonds, do they increase by the periodic amount of interest?

Heck yes they do

17

Does the interest expense increase or decrease as time goes on in a installment note

decreases

18

most corporate bonds are what type?

debenture bonds homie

19

When it asks for the current market value what are ya gone do?

find the PV of the face and PVOA of the interest using the market rate!!

20

on an amortization table what is the interest expense

interest expense is the outstanding balance multiplied by the market rate

21

what value do bonds usually sell at?

their present value

22

When you sell at a premium using the effective interest method, on each payment the amount of cash paid will be

greater than the effective interest

Think:
Debit Interest
Debit Premium
Credit cash
so it must be more

23

When you sell at a discount using the effective interest method, on each payment the amount of cash paid will be

less than the effective interest

Think:
Debit Interest
credit discount
Credit cash
so it must be less

24

if you sell at a discount or premium, then how will the straight line amortization be compared to the effective interest amortization

It will be higher than the effective interest amount in the early years and less than the effective
interest amount in the later years.

25

What really are zero coupon bonds

basically they offer a deep discount off the face value which acts as a type of return