Financial Reporting Standards - CPA Financial Accounting and Reporting (FAR)
Card 1 of 68
A city government is currently preparing fund-based financial statements. What guides the timing of recognition for the transactions to be reported?
A city government is currently preparing fund-based financial statements. What guides the timing of recognition for the transactions to be reported?
Tap to reveal answer
Governmental funds are prepared using the modified accrual basis of accounting, while proprietary funds use regular accrual accounting.
Governmental funds are prepared using the modified accrual basis of accounting, while proprietary funds use regular accrual accounting.
← Didn't Know|Knew It →
Which of the following is true regarding cash basis and accrual basis revenue in regards to accounts receivable?
Which of the following is true regarding cash basis and accrual basis revenue in regards to accounts receivable?
Tap to reveal answer
Under both the cash and accrual basis of accounting, reductions in accounts receivable is generally due to cash collections.
Under both the cash and accrual basis of accounting, reductions in accounts receivable is generally due to cash collections.
← Didn't Know|Knew It →
When adjusting service revenue from cash basis to accrual basis, which of the following adjustments must be made?
When adjusting service revenue from cash basis to accrual basis, which of the following adjustments must be made?
Tap to reveal answer
To adjust cash received to accrual basis income, ending AR is added back to cash received and beginning AR is subtracted.
To adjust cash received to accrual basis income, ending AR is added back to cash received and beginning AR is subtracted.
← Didn't Know|Knew It →
Under modified accrual basis accounting, revenue is recognized when:
Under modified accrual basis accounting, revenue is recognized when:
Tap to reveal answer
Modified accrual is used by governmental funds and income is recognized when it can be reasonably measured and when it is available for usage during the year or 60 days after.
Modified accrual is used by governmental funds and income is recognized when it can be reasonably measured and when it is available for usage during the year or 60 days after.
← Didn't Know|Knew It →
The objectives of financial reporting, as set forth by the FASB conceptual framework, are based on which of the following?
The objectives of financial reporting, as set forth by the FASB conceptual framework, are based on which of the following?
Tap to reveal answer
FASB basis its objectives for financial reporting on the needs of the ultimate financial statement user.
FASB basis its objectives for financial reporting on the needs of the ultimate financial statement user.
← Didn't Know|Knew It →
Which of the following is true about both timeliness and understandability according to the FASB conceptual framework?
Which of the following is true about both timeliness and understandability according to the FASB conceptual framework?
Tap to reveal answer
Enhancing qualitative characteristics of financial reporting include timeliness, understandability, comparability, and verifiability.
Enhancing qualitative characteristics of financial reporting include timeliness, understandability, comparability, and verifiability.
← Didn't Know|Knew It →
According to the FASB conceptual framework, revenue results from which of the following?
According to the FASB conceptual framework, revenue results from which of the following?
Tap to reveal answer
Revenue results from an overall reduction in liabilities, while expenses result from an overall increase in liabilities.
Revenue results from an overall reduction in liabilities, while expenses result from an overall increase in liabilities.
← Didn't Know|Knew It →
How should the nondeductible portion of meals and entertainment expenses be reported in the financial statements on the income tax basis?
How should the nondeductible portion of meals and entertainment expenses be reported in the financial statements on the income tax basis?
Tap to reveal answer
Using the income tax basis, nondeductible expenses should be included in the expense category in determining income.
Using the income tax basis, nondeductible expenses should be included in the expense category in determining income.
← Didn't Know|Knew It →
IFRS requires which revenue recognition method when the outcome of rendering services cannot be estimated reliably?
IFRS requires which revenue recognition method when the outcome of rendering services cannot be estimated reliably?
Tap to reveal answer
IFRS requires that the cost recovery method be used with an outcome of rendering services is uncertain.
IFRS requires that the cost recovery method be used with an outcome of rendering services is uncertain.
← Didn't Know|Knew It →
Which of the following statements regarding research and development under IFRS is correct?
Which of the following statements regarding research and development under IFRS is correct?
Tap to reveal answer
Under IFRS, research related costs are expensed and development costs are capitalized
Under IFRS, research related costs are expensed and development costs are capitalized
← Didn't Know|Knew It →
Which of the following statements regarding the accounting for investment property under IFRS is correct?
Which of the following statements regarding the accounting for investment property under IFRS is correct?
Tap to reveal answer
Under IFRS, no depreciation expense is recorded under the fair value method. Also under IFRS, gains and losses from fair value adjustments on investment property are recorded on the income statement.
Under IFRS, no depreciation expense is recorded under the fair value method. Also under IFRS, gains and losses from fair value adjustments on investment property are recorded on the income statement.
← Didn't Know|Knew It →
Which of the following statements regarding the accounting for investment property under IFRS is correct?
Which of the following statements regarding the accounting for investment property under IFRS is correct?
Tap to reveal answer
Under IFRS, no depreciation expense is recorded under the fair value method. Also under IFRS, gains and losses from fair value adjustments on investment property are recorded on the income statement.
Under IFRS, no depreciation expense is recorded under the fair value method. Also under IFRS, gains and losses from fair value adjustments on investment property are recorded on the income statement.
← Didn't Know|Knew It →
Under US GAAP, which of the following should be disclosed for for each reportable operating segment of an enterprise? A) Profit or loss B) Total Assets
Under US GAAP, which of the following should be disclosed for for each reportable operating segment of an enterprise? A) Profit or loss B) Total Assets
Tap to reveal answer
Both of these items should be disclosed under US GAAP. Generally, more pieces of information should be disclosed than less.
Both of these items should be disclosed under US GAAP. Generally, more pieces of information should be disclosed than less.
← Didn't Know|Knew It →
The Charlotte Corporation buys a building on January 1, Year 1, for $900,000. The building is expected to have a useful life of 10 years and no salvage value. The double-declining balance method is used for depreciation purposes and the half-year convention is not elected. Early in Year 3, company officials decide to switch to the straight-line method of depreciation. What amount of depreciation expense should the company recognize in its Year 3 income statement?
The Charlotte Corporation buys a building on January 1, Year 1, for $900,000. The building is expected to have a useful life of 10 years and no salvage value. The double-declining balance method is used for depreciation purposes and the half-year convention is not elected. Early in Year 3, company officials decide to switch to the straight-line method of depreciation. What amount of depreciation expense should the company recognize in its Year 3 income statement?
Tap to reveal answer
In Year 1, the company will report depreciation of $180K ($900K x 20%), bringing the year two beginning book value to $720K. In Year 2, the company will record depreciation of $144K ($720K x 20%), bringing the year 3 beginning book value to $576K. In Year 3, the company will amortize this amount evenly over the remaining 8 years of the asset's life.
In Year 1, the company will report depreciation of $180K ($900K x 20%), bringing the year two beginning book value to $720K. In Year 2, the company will record depreciation of $144K ($720K x 20%), bringing the year 3 beginning book value to $576K. In Year 3, the company will amortize this amount evenly over the remaining 8 years of the asset's life.
← Didn't Know|Knew It →
Which of the following accounting changes would receive prospective treatment in the income statement?
Which of the following accounting changes would receive prospective treatment in the income statement?
Tap to reveal answer
Changes in depreciation and changes in estimated useful lifes are applied proactively, not retroactively.
Changes in depreciation and changes in estimated useful lifes are applied proactively, not retroactively.
← Didn't Know|Knew It →
Which of the following would be reported as an adjustment to beginning retained earnings for the earliest period presented?
Which of the following would be reported as an adjustment to beginning retained earnings for the earliest period presented?
Tap to reveal answer
Both of these choices are presented as prior period adjustments by adjusting retained earnings in the earliest period presented.
Both of these choices are presented as prior period adjustments by adjusting retained earnings in the earliest period presented.
← Didn't Know|Knew It →
Under IFRS, an entity is required to file the following financial statements initially?
Under IFRS, an entity is required to file the following financial statements initially?
Tap to reveal answer
An entity just filing under IFRS needs to file 2 statements of; comprehensive income, income statements, cash flows, changes in equity, notes, and 3 balance sheets.
An entity just filing under IFRS needs to file 2 statements of; comprehensive income, income statements, cash flows, changes in equity, notes, and 3 balance sheets.
← Didn't Know|Knew It →
The Charlotte Corporation buys a building on January 1, Year 1, for $900,000. The building is expected to have a useful life of 10 years and no salvage value. The double-declining balance method is used for depreciation purposes and the half-year convention is not elected. Early in Year 3, company officials decide to switch to the straight-line method of depreciation. What amount of depreciation expense should the company recognize in its Year 3 income statement?
The Charlotte Corporation buys a building on January 1, Year 1, for $900,000. The building is expected to have a useful life of 10 years and no salvage value. The double-declining balance method is used for depreciation purposes and the half-year convention is not elected. Early in Year 3, company officials decide to switch to the straight-line method of depreciation. What amount of depreciation expense should the company recognize in its Year 3 income statement?
Tap to reveal answer
In Year 1, the company will report depreciation of $180K ($900K x 20%), bringing the year two beginning book value to $720K. In Year 2, the company will record depreciation of $144K ($720K x 20%), bringing the year 3 beginning book value to $576K. In Year 3, the company will amortize this amount evenly over the remaining 8 years of the asset's life.
In Year 1, the company will report depreciation of $180K ($900K x 20%), bringing the year two beginning book value to $720K. In Year 2, the company will record depreciation of $144K ($720K x 20%), bringing the year 3 beginning book value to $576K. In Year 3, the company will amortize this amount evenly over the remaining 8 years of the asset's life.
← Didn't Know|Knew It →
Which of the following accounting changes would receive prospective treatment in the income statement?
Which of the following accounting changes would receive prospective treatment in the income statement?
Tap to reveal answer
Changes in depreciation and changes in estimated useful lifes are applied proactively, not retroactively.
Changes in depreciation and changes in estimated useful lifes are applied proactively, not retroactively.
← Didn't Know|Knew It →
Which of the following would be reported as an adjustment to beginning retained earnings for the earliest period presented?
Which of the following would be reported as an adjustment to beginning retained earnings for the earliest period presented?
Tap to reveal answer
Both of these choices are presented as prior period adjustments by adjusting retained earnings in the earliest period presented.
Both of these choices are presented as prior period adjustments by adjusting retained earnings in the earliest period presented.
← Didn't Know|Knew It →