Final Exam Chapters Interm Acct Ii

Front 1

What are the three required disclosures for changes?

Back 1

a. The nature of and justification for the change

b. The effect of the change on each financial statement line item

c. A statement that comparative information has been retroactively adjusted or that retrospective application is impracticable

Front 2

Cumulative effect is reflected in

Back 2

assets or liabilities and beginning retained earnings

Front 3

Retroactive application restates

Back 3

prior period financial statements

Front 4

If it is impracticable to determine the cumulative effect of the change, the entity shall apply the new principle as if the change was made

Back 4

prospectively (i.e. change to LIFO).

Front 5

Changes in accounting estimates are:

Back 5

prospective

Front 6

Prospective means

Back 6

current or future periods

Front 7

For changes in estimates that are material, a disclosure note should describe the

Back 7

nature of the change and the effect on current income.

Front 8

Change in Estimate Effected by Change in Principle is new category mostly for:

Back 8

Depreciation expense

Front 9

A change in reporting entity is

Back 9

retrospective application

Front 10

Undepreciated cost as of 1/1 =

Back 10

Cost - Depreciation to date

Front 11

Depreciable Base =

Back 11

Undepreciated cost as of 1/1 - Residual value

Front 12

New annual depreciation =

Back 12

Depreciable Base - REMAINING life

Front 13

Accounting for error corrections is

Back 13

retrospective application

Front 14

If RE is affected by error, then correction is reported as a

Back 14

prior period adjustment (PPA) to Beg Retained Earnings

Front 15

Change from Non-GAAP to GAAP principle is a

Back 15

error correction

Front 16

A Prior Period Error Not Affecting Income Involves

Back 16

incorrect account classification (No PPA)

Front 17

An example of Prior Period Error Not Affecting Income Involves

Back 17

classifying salaries payable as accounts payable

Front 18

A Prior Period Error Affecting Income example is

Back 18

Failure to record depreciation expense as a asset (PPA)

Front 19

With a counterbalance error, RIE is fixed at the end of year

Back 19

2, after books closed

Front 20

If books aren't closed for counterbalance error then adjust

Back 20

RIE

Front 21

A counterbalance error is

Back 21

Error in Ending Inventory under periodic method
Or
cash versus accrual accounting

Front 22

Error correction disclosures are:

Back 22

1. The nature of the error

2. The impact of the error on each financial statement line item

3. Statement that comparative information is retroactively adjusted

Front 23

COGS =

Back 23

Beg Inv + Net Purch - Ending Inv

Front 24

Every type of change is retrospective except

Back 24

change in estimate

Front 25

In every set of financials, the first footnote is

Back 25

Summary of Significant Accounting Policies

Front 26

Summary of Significant Accounting Policies discloses

Back 26

the methods used to prepare financial stmts

Front 27

The cost-benefit principle says to report

Back 27

financial facts significant enough to influence the judgment of an informed reader

Front 28

Inventory note includes

Back 28

a. Basis of Inv (lower of cost or market)

b. Costing Method (LIFO,FIFO, weighted average)

Front 29

Property, Plant, and Equipment note includes

Back 29

a. Basis of valuation (historical cost)

b. Pledges, liens, or other commitments related to these assets

c. Depreciation: current period depreciation expense and balance of accumulated depreciation

Front 30

Credit claims note includes

Back 30

a. Methods of financing

b. Timing of future cash outflows

Front 31

Equity Holders’ Claims note includes

Back 31

a. Shares authorized, issued, and outstanding

b. Equity Instruments

c. Restrictions on the earnings available for dividends

Front 32

Contingencies and Commitments includes

Back 32

• Litigation, debt, taxes, and purchase commitments

Front 33

Items Requiring Extensive Disclosure

Back 33

• Deferred Taxes, Pensions, and Leases

Front 34

Accounting changes includes

Back 34

• Change in Principle and Change in Estimate, if material

Front 35

Subsequent events are

Back 35

a. Events that occur after the financial statement date, but before report issuance (public companies have 90 days to issue)

Front 36

Type 1 subsequent event

Back 36

adjusts financial statements because already in year end stmt

Front 37

Type 2 Event is

Back 37

disclosure only

Front 38

Related party transactions are

Back 38

not at an “arms length”

Front 39

SFAS 57 requires disclosure of

Back 39

the nature of the relationship, a description of the transaction, and the dollar amounts involved

Front 40

Identifying Operating Segments – A component:

Back 40

1. That earns revenues and incurs expenses

2. Whose operating results are regularly reviewed by the chief operating decision maker to assess performance

3. That has discrete financial information available from the internal financial reporting system.

Front 41

Must meet one of the tests for significance to be a segment:

Back 41

1. Revenue > than 10% of combined segment revenue


2. Absolute value of Profit/Loss > 10% of > :


a. Combined operating profit of all segments that did not incur a loss

b. Combined loss of all segments that did incur a loss

3. Assets > 10% of combined segments assets