Use LEFT and RIGHT arrow keys to navigate between flashcards;
Use UP and DOWN arrow keys to flip the card;
H to show hint;
A reads text to speech;
17 Cards in this Set
- Front
- Back
|
Deb Co. records all sales using the installment method of accounting. Installment sales contracts call for 36 equal monthly cash payments. According to the FASB’s conceptual framework, the amount of deferred gross profit relating to collections 12 months beyond the balance sheet date should be reported in the A.Current liability section as a deferred revenue. B.Noncurrent liability section as a deferred revenue. C.Current asset section as a contra account. D.Noncurrent asset section as a contra account. |
Under the installment method, a credit sale is recorded by debiting a receivable and crediting inventory and deferred gross profit. Revenue is recognized only when cash is collected. Because the essence of an installment sale is an equal change in receivables and inventory, the deferred gross profit account serves to reduce the asset valuation to the unrecovered cost of goods sold. Accordingly, deferred gross profit functions as an asset valuation (contra) account. The installment receivables (and related valuation accounts) should be classified in the current assets section of the balance sheet if they are collectible within the operating cycle. All of Deb Co.’s installment contracts are for 36 months. They are apparently related to normal operations and should be classified as current. |
|
|
A company has beginning net assets of $100,000 and ending net assets of $95,000. During the year, additional capital stock was sold for $8,000, and dividends of $3,000 were declared. Using the capital maintenance approach, the net income (loss) for the year is calculated as |
The capital maintenance approach requires that income be determined by finding the change in equity (net assets) after adjusting for investments by, and distributions to, owners. However, this approach does not provide the detail of the transaction approach to income determination under which each component of income is measured and reported. Change in net assets $ (5,000) Capital stock sold (8,000) Dividends declared 3,000 Total $(10,000) |
|
|
A company that is a large accelerated filer must file its Form 10-Q with the United States Securities and Exchange Commission within how many days after the end of the period? |
Form 10-Q is the quarterly report to the SEC. It must be filed within 40 days after the end of the period for large accelerated filers and accelerated fliers. 45 days for non accelerated fliers |
|
|
Which of the following is least likely to be accomplished by providing general-purpose financial information useful for making decisions about providing resources to an entity? A.To provide information about an entity’s performance through measures of earnings and its components. B.To provide information about management’s performance. C.To provide information to help investors, creditors, and others assess the amounts, timing, and uncertainty of prospective net cash inflows to the entity. D.To provide sufficient information to determine the value of the entity. |
Answer (D) is correct. |
|
|
What is a Prospectus? |
It is a written document proposing a sale of securities to potential investors. The prospectus contains most of the information in the registration statement. It must be furnished to each potential investor prior to the time of delivery of the securities. |
|
|
Ande Co. estimates uncollectible accounts expense using the ratio of past actual losses from uncollectible accounts to past net credit sales, adjusted for anticipated conditions. The practice follows the accounting concept of A.Matching. B.Going-concern. C.Consistency. D.Substance over form. |
Answer (A) is correct. |
|
|
A business interest that constitutes a large part of an individual’s total assets should be presented in a personal statement of financial condition as A.A single amount equal to the estimated current value of the business interest. B.A separate listing of the individual assets and liabilities at cost. C.A single amount equal to the proprietorship equity. D.Separate line items of both total assets and total liabilities at cost. |
Answer (A) is correct. |
|
|
According to IFRS, when a complete set of financial statements is presented, how are other comprehensive income (OCI) and its components reported? A.Must be reported in a separate statement or in a single statement of comprehensive income reporting all items of income and expense for the period. B.Must be reported in a separate statement. C.They are not required to be reported under IFRS. D.May be reported in a single statement of comprehensive income or disclosed in a statement of changes in equity. |
Answer (A) is correct. |
|
|
When a full set of general-purpose financial statements is presented, comprehensive income and its components A.Must be reported net of related income tax effects in total and individually. B.Appear as a part of discontinued operations and extraordinary items. C.Appear only in a supplemental schedule in the notes to the financial statements. D.Must be reported in a presentation that includes the components of other comprehensive income and their total. |
Answer (D) is correct. |
|
|
A company had $100,000 in current liabilities at the end of the current year. The company refinanced this liability on a noncurrent basis subsequent to the end of the year but before the financial statements were issued. How should this liability be presented, according to IFRS and U.S. GAAP, in the company’s year-end financial statements? A.In noncurrent liabilities under IFRS and in current liabilities under U.S. GAAP. B.In noncurrent liabilities under IFRS and U.S. GAAP. C.In current liabilities under IFRS and U.S. GAAP. D.In current liabilities under IFRS and in noncurrent liabilities under U.S. GAAP. |
Answer (D) is correct. |
|
|
Comprehensive Income is |
includes all changes in equity of a business during a period except those from investments by and distributions to owners. It includes all components of Net income and Other Comprehensive income. |
|
|
OCI Includes |
Avalaible for Sale Derivatives Retirements Foreign Currency
Always Desire Friends |
|
|
Hahn Co. prepared financial statements on the cash basis of accounting. The cash basis was modified so that an accrual of income taxes was reported. Are these financial statements in accordance with the modified cash basis of accounting? A.No, because the modifications result in financial statements equivalent to those prepared under the accrual basis of accounting. B.Yes. C.No, because there is no substantial support for recording income taxes. D.No, because the modifications are illogical. |
Answer (B) is correct. |
|
|
Personal financial statements usually consist of A.A statement of financial condition, a statement of changes in net worth, and a statement of cash flows. B.A statement of net worth, an income statement, and a statement of changes in net worth. C.A statement of net worth and a statement of changes in net worth. D.A statement of financial condition and a statement of changes in net worth. |
Answer (D) is correct. |
|
|
Which of the following is most likely to be accounted for retrospectively by first-time adopters of IFRS? A.Estimates. B.Hedges. C.Inventory. D.Noncontrolling interests. |
Answer (C) is correct. |
|
|
BEPS and DEPS |
Income available to common shareholders/ Weighted average number of common shares
(BEPS Numerator + Effect of Dilutive PCS) / (BEPS Denominator + Effect of Dilutive PCS) |
|
|
What will dilute EPS |
Convertible Securities Options, warrants Contingently issuable common shares |
