Financial Rptg - Chapter 1

Front 1

What are the categories of relevance?

Back 1

PFT
Predictive value
Feedback value
Timeliness

Front 2

What are the categories of reliability?

Back 2

NOBODY RELIES ON FINANCIALS UNLESS VERIFIABLE

Neutrality
Representational Faithfulness
Verifiability

Front 3

Name the 10 elements of the financial statements.

Back 3

assets, liabilities, revenues, expenses, equity, comprehensive income, gains, losses,iinvestments by owners, distributions to owners

Front 4

According to SFAC 2, "qualitative characteristics of accounting information", financial information must be what?

Back 4

Understandable, relevant, reliable, comparable, consistent, material, less costly than benefit provided

Front 5

The first GAAP standards were determined by what body?

Back 5

the Committee on Accounting Procedure

Front 6

What standards/interpretations are provided by the Accounting Principles Board?

Back 6

APB Opinions

Front 7

What body currently determines GAAP?

Back 7

The FASB

Front 8

What are tehfull set of financial statements?

Back 8

1. Balance sheet
2. Income statement
3. Statement of cash flows
4. Statement of comprehensive income
5. Statement of changes in owner's equity

Front 9

Is interest expense an operating or non-operating expsenses?

Back 9

Non-operating.

Front 10

What body establishes Statements of Financial Accounting Standards?

Back 10

FASB

Front 11

What statements establish GAAP?

Back 11

Statements of Financial Accounting Standards.

Front 12

What are the 6 most authoritative GAAP pronouncements?

Back 12

BOSSI
accounting research bulletins
APB opinions
FASB statements of Financial Accounting Standards
FASB Staff positions
FASB Interpretations
FASB Statement Implementation Issues

Front 13

In order to book a subsequent adjustment to an amount previously reported in discountinued operations, the adjustment must occur within this amount of time.

Back 13

1 year

Front 14

The power to estsablish GAAP ressts with this body.

Back 14

The SEC

Front 15

What 3 bodies of accounting profession have determined GAAP?

Back 15

1. committee on Accounting Procedure
2. Accounting Principles Board
3. FASB

Front 16

What standards are provided by the CaP interpretations

Back 16

Accounting Research Bulletins.

Front 17

FACT
Assets in discontinued operations are not depreciated or amortized.

Back 17

n/a

Front 18

What's the presentation order of the major components of an income and retained earnings statement?

Back 18

IDEA
1. Income/loss from continuing operations
2. Income/loss from discontinued operations
3. extraordinary items
4. Cumulative effect of change in accounting principle

Front 19

Indicate whether the item is presented "gross of tax" or "net of tax" in the financial statements.
1. Income from continuing operations
2. Income from discontinued operations
3. Extraordinary items
4. Cumulatifve effect of change in accounting principle

Back 19

1. Gross of tax
2,3,4. Net of tax

Front 20

What are the secondary accounting qualities / characteristics?

Back 20

comparability & consistency

Front 21

Losses from discontinued operations include losses from these 3 areas.

Back 21

1. impairment loss
2. gain/lloss from actual operations
3. gain/loss disposal

Front 22

You anticipate a loss on discontinued operations. Do you book the loss now or when it occurs?

Back 22

When it occurs

Front 23

Is depreciation an operating or non-operating expense?

Back 23

operating

Front 24

In order to hold an item as held for sale, the sale must be probable and the sale expectred to happen in this amount of time.

Back 24

1 year

Front 25

A component of an entity classified as held for sale, must be reported in this part of the income statement.

Back 25

Discontinued operations

Front 26

This is the framework that provides the basis for all FAsB pronouncements.

Back 26

Statements of Financial Accounting Concepts

Front 27

For an item to be classified as extraordinary, it must meet these 2 points.

Back 27

unusual and infrequent

Front 28

Freight out is part of this expense on the income statement.

Back 28

Selling expenses

Front 29

What are teh 2 pervasive contraints in considering the qualities of financial information?

Back 29

1. Less costly than benefits
2. Material

Front 30

What are the 2 categories of decision usefulness?

Back 30

Relevance & reliability

Front 31

Accounting Research Bulletins are from what body?

Back 31

The Committee on Accounting procedure.

Front 32

What are teh primary qualities of decision usefulness?

Back 32

Relevance and reliability

Front 33

Where must accumulated other comprehensive income be shown?

Back 33

balance sheet (item of equity)

Front 34

Does comprehensive income have to be sohwn in interim financial statements?

Back 34

Yes

Front 35

FACT
Do not eliminate intercompany transactions when reporting segments.

Back 35

n/a

Front 36

FACT
Income tax is excluded from reportable segment information.

Back 36

n/a

Front 37

What are the three types of accounting changes?

Back 37

Changes in accounting estimate, principle and entity

Front 38

Whats the difference with an income statment of a development stage enterprise?

Back 38

Cumulative revenues and expenses must be shown.

Front 39

Wha'ts the difference in the statement of cash flows for a development stage enterprise?

Back 39

Must show cumulative cash inflows & outflows.

Front 40

Is net income reported on a pershare basis?

Back 40

yes

Front 41

Is a change in depreciation acccounted for as a change in estimate or a change in principal?

Back 41

Chnge in estimate

Front 42

If a change in accounting estiate affects several future periods, what must you do?

Back 42

Disclose in notes.

Front 43

Are changes in accounting principle that are inseparatble from a change in estimate, accounted for as a change in principle or as a change in estimate?

Back 43

Change in estimate.

Front 44

FAIR VALUE
Is a change in v aluation techniquie accounted for as a change in accounting estimate or a change in accounting principle?

Back 44

Change in accounting estimate

Front 45

Besides depreciation, when dfo you not adjust the beginning retained earninggs baance when there is a change in accounting principle?

Back 45

When changing to LIFO

Front 46

Explain the use of transaction costs when determining principal/advantageous market and fair value?

Back 46

Transactions are taken into consideration when determining the most afdvantageous market. They are not taken into consideration when determing the fair value.

Front 47

How do you know the principal market for an asset or liability?

Back 47

The market with the greatest volume of activity.

Front 48

FAIR VALUE
If an asset's best use is when in-use, what is the fair value based on?

Back 48

The price to sell the asset to be used by the buyer with other assets in a group.

Front 49

What are components of other comprehensive income?

Back 49

PUFE
Pension minimum liability adjustments
Unrealized gains/losses
Foregin currency items
Effective portion cash flow hedges

Front 50

FOR FINAL REVIEW
Review fair value disclosures on pg F147-F149

Back 50

n/a

Front 51

Is comprehensive income reported on a per share basis?

Back 51

No

Front 52

Explain what comprehensive income is.

Back 52

Changes in equity from nonowner sources. (everything except distributions to and investments from owners)

Front 53

Explain the 75% reporting sufficiency for segments.

Back 53

External revenue of reportable segments must be at least 75% of external consolidsted revenue.

Front 54

FACT - FAIR VALUE (be familiar)
1. market specific (not entity specific)
2. measured in the principal, or most advntageous market, for the asset or liability.
3. Its an exit price (not an entrance price)
4. Should reflect all assumptions market participants would use
5. Doesn't inlcude transportation costs (only if location is n attribute)
6. Asset: assumes the highest and best use of asset
7. Liability: includes nonperformance risk

Back 54

n/a

Front 55

Explain the hierarchy of inputs for fair value measurements.

Back 55

1. Level 1 input: quoted price for identical item in activer market
2. Level 2 input: other observable data
3. Level 3 input: Unobservable data

Front 56

If an assets highest and best use is in-exchange, wht is the fiar value of the asset based on?

Back 56

The price to sell the asset standalone.

Front 57

Name the different fair valuation techniques, and indicate if its used for assets and/or liabilities.
Understand each.

Back 57

Market approach and Income Approach (assets & liabilities); Cost apporach (assets only)

Front 58

If an asset/liability has a principal market and a separate advantageous market, which market is used for fair value measurements?

Back 58

Principal

Front 59

What are the 3 parts of the 10% test for segments?

Back 59

MUST MEET 1:
1. Segment must be 10% or more of total segment revenue.
2. Segment must be 10% or more of all operating segments that didn't report a loss, or 10% or more of segments that did report a loss
3. Segment must have 10% or more of total assets of operating segments.

Front 60

What are the 3 formats to present comprehensive income?

Back 60

1. Below the total for net income in a statement that reports results of operations (combined statements)
2. Separate statement of comprehensive income
3. In a statement of changes in equity.

Front 61

Do you need to show a total for comprehensive income in condensed interim financial statemetns?

Back 61

Yes

Front 62

What are the 4 required disclosures when it comes to comprehensive income? Indicate where the disclosure is required.

Back 62

1. Tax effects of each component in other comprehensive income (in statements or notes)
2. The accumulated balances of componenets of OCI (balance sheet, statement of changes inequity or notes)
3. Total accumulated OCI (balance sheet)
4. Reclassification adjustments

Front 63

What's the forumula for compreensive income?

Back 63

Net income + other comprehensive income